By: Doug Rosen
Yesterday the Swissy made an intense move. I forecasted this move based on my technicals but the move was motivated by the Eurozone debt crisis, that the rescue fund was forced to buy back their own debt. This move also goes to show that you can get into moves that are fundamentally motivated by using technicals.
Yesterday, weekly price action was sitting on the 55 ema just above the 5 ema and this in itself was a very bullish indication, but the fundy's did help. Now, this pair is heading up, and bullish conditions still exist, that has not changed, and price could keep heading up but there will be resistance along the way, and that is good because you need resistance to get a pullback so that you can position yourself into a long. We are bullish, the upper Bollinger band is open and pointing up, the stochastics is in the overbought zone making another cross up and that is very bullish indeed. The 13 ema has crossed above the 21, however, we are swiftly approaching the 50.0 fib level at .9398 so let's just round that off to .9400 and now we have two areas of resistance, the Fib level and the psychological level of .9400. The Bollinger band is in that vicinity too. This resistance will not cause a reversal, but a pullback, an opportunity to slot yourself into this move.
On the daily time frame I see an area of resistance price is nearing it has been respected before and has also served as support and it is a psychological level too, it is .9300. Also, .9314 is last month's high. This level should also cause a pullback before price breaks through to enter a long position into a trade. You can also wait for price to break through then come back down to take a long which would be the conservative method. Price is riding the 5 up but has gapped away from the 5 ema so that confirms the need for price to pullback before continuing on.
On the 4 hour chart price of course is looking incredibly bearish, riding the 5, upper Bollinger band wide open but it didn't stop price from pulling back when it reached the monthly R1 which was a perfect example of how resistance in an uptrend creates entry points. Price has already broken above last week's high as well as today's high and all I can say is if you want in then wait for the Swissy to reach resistance in whatever form comes along then wait for the pullback and join the party.
