Monday starts with a setup that was frequently mentioned by us on our Trading Sniper videos that we post here daily – CHFJPY. The situation here is great for the long-term position investors and can result in a long-lasting decline.
What we are having here is a double top pattern, formed on the super important horizontal resistance on the 112.80 (red). The red area was crucial as a support in the 2017 and after the breakout, is now being tested as a resistance. Both tests resulted in two shooting stars on the weekly chart. Really, cannot find better sell setup than this one. If you want more, you can see that the price bounced also from the 38,2% Fibonacci and is inside of the wedge pattern. This formation promotes a further drop and we are expecting to see the breakout of its lower line.
The current target is on the yearly lows and chances that we will get there are very high. The technical situation here is so good that a comeback above the red line seems almost impossible. Obviously, in this market, everything can happen so stay sharp and do not forget about the stop loss order. Last but not least, going short here can provide positive swaps, which is very important in terms of the long-term entries.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis