Hi,
Euro Swiss is testing the support of an established trading range. In doing so it has formed a W (double bottom type) pattern.
The Bollinger bands are indicating the sort of stalling momentum that often precedes a trend reversal making this a buy set up with potential for a rally back to the trading range resistance
EUR:CHF Daily. Source: Bloomberg
The W Bollinger band set up takes the form of a trough under the lower band ( indicating strong downward momentum) followed by a trough at around the same level but inside the lower band ( indicating weaker momentum). Entry is on confirmation of the second trough (e.g. a close above the high of the candle making the trough).
You can see a good example of the Bollinger W set up earlier in this chart at the first low leading into the trading range.
One advantage of momentum indicators like the Bollinger bands in situations like this is that they provide a clue that the trend may be reversing before it actually hits the trend line.
Under this strategy a set up confirmation occured at yesterday’s close but the market is still around these levels.
One approach to trading strategy is to place the initial stop just behind the latest trend trough and to trail it up behind any new corrective troughs if an uptrend develops
Cheers
Ric
