Trade Recommendation: Gold/CHF
The Gold/Swiss Franc pair (XAU/CHF) began to show signs of weakness in February 2013 when it took out support of 1,500. The downtrend was affirmed in April 2013 when bulls tried to take back the 1,500 but the market confirmed the new resistance. This sparked a selling frenzy that generated 10 long red candles in 13 weeks.
XAU/CHF only started to find resemblance of stability when it dropped to 1,060 support in December 2013. From there, the pair range traded between 1,060 – 1,200 to repair its technical damage. XAU/CHF was able to break out of the range in July 2016 when it went as high as 1,352.044. While bears managed to hold on to 1,300 resistance, bulls responded by creating a higher low at 1,161.664 in July 2017.
Bulls have been flexing their muscles since. This can be your chance to buy the next higher low.
Technical analysis show that the Gold/Swiss Franc pair is creating symmetrical triangle pattern on the weekly chart. This comes after XAU/CHF generated a lower high of 1,326.608 in May 2018. However, the pair has been pulling back since. Even the 4-day, 9-day, and 21-day moving averages are heading south. This affirms our view that the pair may be in its last leg down.
The strategy is to buy the dip as close to 1,250 as possible. If bulls stay above this level, they will gather the momentum required to break out of the pattern and climb to our target of 1,600.
The process may take more than six months.
Weekly Chart of Gold/Swiss Franc on OANDA
As of this writing, the Gold/Swiss Franc pair (XAU/CHF) is trading at 1,279.863 on OANDA.
Summary of Strategy
Buy: As close to 1,250 as possible.
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