The CHFJPY has bounced off of support as visible in this D1 chart. This currency pair has now moved higher and formed a narrow rising wedge formation which is a bearish chart pattern. It currently trades at the upper resistance level of its chart formation and the last daily candlestick indicates a potential reversal. We expect this currency pair to breakdown of it bearish chart formation and retrace back to
its ascending 50 DMA.
MACD indicates that momentum is fading and formed a negative divergence as it does not confirm the recent move higher. We expect to witness a bearish centerline crossover to occur during the correction. RSI has formed a negative divergence as well and is trading near overbought territory. Look out for a false breakout followed by a breakdown which should start the sell-off.
We recommend a short position at 107.50 which would be an add-on trade to our initial short position which we took on August 15th at 105.25. We also recommend a stop buy order at 108.25 with a take profit target of 109.00 in order to hedge this trade.
Traders who wish to exit this trade at a loss are advised to place their stop loss at 109.00. We will not use a stop loss order and execute this trade as recommended. Place your take profit at 104.50.
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