The USDCHF failed to breakout above its resistance area which is marked in light grey in the above H4 chart which resulted in a breakdown. This currency pair continues to trade between the middle band and the upper band of the Bollinger Band indicator which supported the rally from its support area visible in light blue. The resistance area is expected to keep price action from rallying further and breaking out of its range.
The breakdown below the resistance area could lead to a profit taking sell-off as forex traders will realize floating trading profits by exiting long positions. A breakdown below the middle Bollinger Band may result in the addition of new net short positions and further fuel a sell-off in this currency pair. The downside potential is attractive and the upside potential remains limited. The USDCHF is expected to sell-off into its support area.
Forex traders are advised to enter short positions at 1.0095 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 0.9860 has been selected for a potential trading profit of 235 pips.
Forex traders should protect this trade with a stop loss level at 1.0200 for a potential trading loss of 105 pips which will result in a Risk-Reward (RR) ratio of 2.24.
Short @ 1.0095
TP @ 0.9860
SL @ 1.0200