The clean bounce off the trendline and 200 EMA is definitely worth the attention for shorting. In addition a very clean ABC corrective move up. Perhaps the short trade setup could not get any better.

Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.

This analysis was done on MetaTrader 4.

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Trade Idea Details:

EUR/CHF symbol

Type: Bearish

Key support levels: 1.0463, 1.0440

Key resistance levels: 1.0530

Price Action: On the daily chart we have applied two Fibonacci retracement levels to the last two corrective upward waves. Fist Fibs shows that strong resistance has been formed at a 161.8% retracement level which is 1.0667. First, it was the support but then became very strong resistance that has been respected by the market.

We can see that the price is clearly producing lower lows and lower highs, which can result in yet another wave down. The potential downside target is confirmed by two Fibonacci retracement levels, First is 261.8% and second is 161.8% retracement levels. Both are pointing to the 1.0440 as the potential downside target.

On the 1-hour chart, the price rejected the downtrend trendline along with the 200 Exponential Moving Average. These were very clean bonces which add more confirmation of the downside pressure.

At the same time, the price seems to have finished the formation of the ABC correction up, based on the Elliot Wave theory. This should result in yet another major wave to the downside in the coming days or maybe even a few weeks.

Potential Trade Idea: The selling opportunity is presented while price remains within the 1.0520 – 1.0530 area because it would provide the best risk-reward ratio. A daily close above the 1.0530 could be potentially used as the exit signal along with the hard stop loss at 1.0560. Price is expected to move down towards the strong support at 1.0440 area, and this could be potentially used as the downside target.