Forex Trading: USD.CHF short covering rally

by Joe Oliver, Forex Trading-Pips

Forex Trading: USD.CHF made a huge short covering rally Thursday from extreme oversold conditions following rumours of a possible peg between CHF and EUR currency.  Wednesday price action in USD.CHF produced an NR7 Inside day contraction in volatility which typically precedes a large breakout move. Inside bars are indicated on the chart by pink bars, NR7 by red dots above the bar.

Forex Trading, CHF Daily bars

Forex Trading, USD.CHF daily bars

 

 

 

 

 

 

 

Wednesday’s narrow range in USD.CHF produced a ‘squeeze’ on the 60 minute time frame, note the red dots in the squeeze histogram indicating a contraction in volatility. Highs and lows within the squeeze can be bracketed with buy / sell stops either side of the bracket.

Forex Trading, CHF 60 minute bars

Forex Trading, USD.CHF 60 minute bars