The AUDCHF has enjoyed a strong rally which took this currency pair from its support area, marked in light blue in the above H4 chart, into its resistance area visible in light grey. The Bollinger Band indicator confirmed the powerful rally and the middle band provided a strong support level for the advance. The upper band has started to trade sideways and enforces the top of its resistance area as the middle band and the lower band are advancing.
Price action is currently trading between the middle band and between the upper band of the Bollinger Band indicator, but forex traders are likely to realize floating trading profits by closing long positions inside of a solid resistance level. The profit taking sell-off could push the AUDCHF into a full reversal. The breakdown below the resistance area as well as the middle band is also expected to invite new net short positions in this currency pair.
Forex traders are advised to enter short positions at 0.7415 and above in order to be well position for the expected profit taking sell-off in this currency pair and a break in the up-trend. Conservative forex traders should wait for price action to break down below the middle band of its Bollinger Band Indicator which will increase selling pressure. A take profit target of 0.7000has been selected for a potential trading profit of 415pips.
Forex traders should protect this trade with a stop loss level at 0.7500 for a potential trading loss of 85 pips which will result in a Risk-Reward (RR) ratio of 4.88.
Short @ 0.7415
TP @ 0.7000
SL @ 0.7500
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