CHF/JPY Daily Price Forecast – 23rd January 2025

Detailed Analysis of the CHF/JPY H4 Chart:

Overview of the Trade Setup:

This chart represents the CHF/JPY currency pair on the H4 timeframe. The trade setup is a Buy Stop Order, which means the trade will only be triggered if the price moves above a specific level, confirming bullish momentum. The key levels for this trade are:

• Buy Stop: 172.931 (entry point for the trade).

• Stop Loss (SL): 171.850 (level to exit the trade if the market moves against the position).

• Take Profit (TP): 173.521 (target level to close the trade for profit).

This setup is based on a bullish momentum confirmation, supported by technical indicators and price action.

2. Key Technical Indicators and Observations:

• Momentum Power:

  • The momentum power is 0.10102500, which is positive, indicating bullish sentiment. This suggests that buyers are gaining control, and the price is likely to break higher.

  • Momentum confirms the trade, but candlestick confirmation is required before entering.

• Price Action:

  • The price is close to the 172.900 round level, a significant psychological level. A break above this level would confirm bullish momentum.

  • The candlestick patterns show higher lows, indicating that buyers are stepping in and pushing the price upward.

• Moving Average:

  • The price is trading above the 200-period moving average (green line), which indicates a bullish trend on this timeframe.

  • The moving average is sloping upward, further confirming the bullish bias.

• Support and Resistance Levels:

  • Support: The support level at 171.850 (SL) is well-placed below recent lows, allowing room for minor retracements without invalidating the trade.

  • Resistance: The resistance level at 173.521 (TP) aligns with previous price action and a potential supply zone.

3. Risk-to-Reward Ratio:

• Risk: The distance between the Buy Stop and the Stop Loss is 108.1 pips (172.931 – 171.850).

• Reward: The distance between the Buy Stop and the Take Profit is 59 pips (173.521 – 172.931).

• Risk-to-Reward Ratio: Approximately 1:0.55. While the risk-to-reward ratio is below the ideal 1:1, the trade is valid due to strong technical confirmation.

4. Trade Justification:

• Bullish Momentum:

  • The positive momentum power and price action near the 172.900 round level suggest a strong likelihood of a bullish breakout.

  • The chart indicates a long trade confirmation, aligning with the buy stop order.

• Trend Alignment:

  • The price is above the 200-period moving average, confirming a bullish trend.

  • The moving averages and price structure indicate that buyers are in control.

• Logical Stop Loss and Take Profit:

  • The Stop Loss is placed below the recent support level, allowing for minor retracements without invalidating the trade.

  • The Take Profit is placed at a logical resistance level, ensuring a realistic target.

5. Potential Risks:

• False Breakout:

  • If the price fails to sustain above 172.931, the trade could be invalidated, resulting in a loss.

• Market Volatility:

  • Sudden news or events could cause unexpected price movements, leading to a spike in volatility.

• Risk-to-Reward Ratio:

  • The risk-to-reward ratio is slightly below the ideal level, which may not appeal to all traders. Adjusting the TP or SL could improve this ratio.

6. Educational Takeaways:

• Buy Stop Orders:

  • A Buy Stop order is a pending order placed above the current market price. It is used to enter a trade only when the price moves higher, confirming bullish momentum.

• Importance of Key Levels:

  • Round numbers like 172.900 often act as psychological levels where traders place orders. These levels are critical for identifying potential breakouts or reversals.

• Risk Management:

  • Always calculate the risk-to-reward ratio before entering a trade. While this trade has a slightly unfavorable ratio, the technical setup justifies the risk.

• Trend Confirmation:

  • Trading in the direction of the trend (in this case, bullish) increases the probability of success. The upward-sloping moving average and price action above it confirm the bullish trend.

7. Summary of the Trade Setup:

• Buy Stop: 172.931 (above key resistance level to confirm bullish momentum).

• Stop Loss (SL): 171.850 (below recent support to allow for retracements).

• Take Profit (TP): 173.521 (at a logical resistance level).

This trade setup aligns with the bullish trend and momentum, offering an opportunity to profit from a continuation of the upward move. However, traders should carefully monitor the risk-to-reward ratio and wait for candlestick confirmation before execution.