USD/CHF: Bearish engulfing candle driving the price towards the support
By Eaglefx On May 13, 2020 in Daily Market Analysis
USD/CHF produced a bearish engulfing candle on the daily chart yesterday. The price upon finding its double top resistance produced two bearish candles consecutively followed by a bullish inside bar. Yesterday’s bearish candle has set a strong bearish tone; thus, the sellers may look to go short in the daily chart. Major intraday charts such as the H4 and the H1 look good for the bear as well. Let us now have a look at those three charts.
Chart 1 USD/CHF Daily Chart
The chart shows that the price had a rejection at 0.97605 twice. Upon producing a shooting star, the price headed towards the South with one more candle. It then produced a bullish inside bar followed by yesterday’s bearish engulfing candle. The sellers may go short below 0.96655. The price may find its next support around 0.95935.
Chart 2 USD/CHF H4 Chart
The chart shows that the price made a strong bearish move and breached the level of 0.97000. The pair is trading around the breakout level now. If the price produces a bearish reversal candle, the sellers may go short and drive the price towards the South. The price may find its next support around 0.96110. On the contrary, if the resistance is breached, the price may head towards the North and find its resistance around 0.97155.
Chart 3 USD/CHF H1 Chart
The H1 chart shows that the price made a strong bearish move and had a bounce at 0.96680. Upon producing a bullish engulfing candle, the price has been heading towards the North. The level of 0.97000 has been working as a level of resistance. It has already produced a bearish engulfing candle, but it did not create bearish momentum. The pair is trading around the resistance level. If it produces a bearish reversal candle again, it would be considered double top resistance. This may make the sellers interested to go short in the pair and drive the price towards the level of 0.96680. In case of a breakout at the level of 0.96680, the price may head towards the South with more bearish momentum and find its support around 0.96300. In case of a bullish breakout, the price may find its resistance 0.97060.
Considering these three charts, it seems that the pair may produce another bearish candle on the daily chart. There is enough space for the price to travel towards the downside. Thus the candle may end up being a long bearish candle as well.