The EURCHF (see EURCHF live chart here) is trading at its support area, marked in light blue in the above H4 chart, following a sell-off from the top end of its resistance area which is visible in light blue. Once this currency pair reached its support area, it attempted a breakdown below it; the breakdown was unsuccessful and the EURCHF has recovered back into its support area. The lower band of the Bollinger Band indicator followed the breakdown and is still trading below its support area.
Price action is trading between the lower band and the middle band of the Bollinger Band indicator as all three bands are sloping to the downside. Forex traders may take the recent sell-off as a good opportunity in order to realize floating trading profits and close their short positions. This will result in a short-covering rally which can take the EURCHF back into its resistance area. A breakout above the middle Bollinger Band will also attract new net buy orders.
Forex traders are recommended to enter long positions at 1.0830 and below this level in order to take advantage from the expected short-covering rally. Conservative forex traders should wait for a breakout above the middle band of it Bollinger Band indicator before entering their long positions. A take profit target of 1.0990 has been set for a potential trading profit of 160pips on the H4 Chart. More buy orders are expected after the EURCHF completes its breakout above the middle Bollinger Band.
Forex traders should protect this trade with a stop loss level at 1.0770 for a potential trading loss of 60pips which will result in a Risk-Reward (RR) ratio of 2.67.
Long @ 1.0830
TP @ 1.0990
SL @ 1.0770
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