CAD/CHF – Deja Vous, Right On Cue
Matt Simpson March 22, 2019 1:39 AM
Last Friday we highlighted a potential bearish Deja Vous pattern. Whilst bearish momentum is taking hold, we may see a pause in trend before it breaks to new lows.
The daily trend structure is firmly bearish, and the 61.8% Fibonacci retracement level performed well as resistance. Friday’s break out of its 36-pip range marked the beginning of its next impulsive move lower. And two clear, bearish range expansion candles reaffirmed dominance with daily closes beneath 0.7460. Furthermore, the MACD points lower and, with no signs of bearish divergence, the path of least resistance appears to point lower.
If the ‘Deja Vous’ pattern is to be repeated, this could be part of a 400-pip decline and prices could be gearing up for a break beneath the 0.7178 low. However, whilst the bias remains bearish overall, there are a few indications we could be approaching a consolidation phase over the near-term.
- 6 consecutive bearish days: Recent history shows the streak ends around 4-days, and we’ve not seen a streak this long since June 2018.
- Daily close beneath lower Keltner band: As prices typically spend around 98% of their time within the bands, it suggests over-extension over the near-term.
- 2-period RSI oversold: Useful for near-term overbought/oversold, it reached 1.7 by the close
- Stalled at 50% retracement level: Technically not a Fibonacci ratio, but generally a reliable one none-the less.
We don’t consider these warning signals as detrimental to the trend (as that remains bearish beneath the 0.7560 high). But they could provide opportunity for a better-time entry, or to aid trade management by reducing risk exposure if already in a trade.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.