Aussie: Swiss has the potential to turn into an interesting example of a sell set up for swing traders over the next day or 2.
Wedge Set Up
The blue pattern on the hourly chart looks as though it may be forming a wedge or "ending diagonal" pattern.
It's a bit early to be certain about this yet. For the set up to be completed, price needs to form a base around current levels and then rally to respect the wedge resistance for a third time. I've anticipated how this might play out by labelling points "d" and "e" in advance on the chart below.
So while all this is a bit premature, this chart has ticked all the boxes so far. It's amazing how often things go on to complete the script in these circumstances so I thought it was worth bringing to readers attention before the weekend.
A third peak at the wedge resistance would set up for a potential correction of the whole rally shown on this chart.
This situation represents potentially attractive reward: risk. There may be an opportunity to sell close to the peak at "e" with a stop loss just above that peak. A profit objective based on a 50% retracement of the rally (shown as the support zone on the chart) is likely to be a lot further from your entry than the stop level if that happens.
A summary of this approach to strategy would be:
- Sell if price rallies from here and makes a 3rd peak at the wedge resistance ("e")
- Place initial buy stop loss behind the peak at "e"
- Buy to take profit around the 50% retracement of the whole rally on the chart