The March Swiss Franc is trading lower overnight. Last night’s rally to 1.0755 fell short of breaking out over the last swing top at 1.0768. A trade though this level would have turned the main trend up on the daily chart and probably would have launched the start of a strong rally. With sell stops likely hidden over this level, traders should be prepared for a breakout at some point in the near future that could trigger an acceleration to the upside.
In the meantime, traders should be focusing on today’s developing closing price reversal top. Typically when a market forms a higher-top, lower-close, there is a 2 to 3 day correction back to 50 to 61.8 percent of the last rally. In this case, the rally from 1.0431 to 1.0755 should trigger a near-term correction back to 1.0593 to 1.0555.
Trend traders may want to press the short side today since the daily chart appears to have a downside bias. Aggressive counter-trend traders are likely to wait for the pull-back into the retracement zone before even considering the long side. Of course, a decision will have to be made whether to chase the market if it breaks out over 1.0568. Longer-term traders would like to see a secondary higher bottom formed between 1.0593 to 1.0555 to give them the confidence to trade the long side for a prolonged move.
