1/ USDCHF Monthly Pitchfork
2/ Novartis Breaks Out
3/ Understanding the RSI
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1/
USDCHF Monthly Pitchfork
On this long-term chart of the U.S. dollar versus the Swiss franc, we are using Andrew’s Pitchfork. First off, we need 3 reference points. In this instance we start from the May 1989 high to the April 1995 low and back to the October 2000 high as the final reference point.
As you can see, the lower band was able to catch the August 2011 low as well as the October 2022 high. From late 2011 to those October 2022 high, the price was “cruising” (day traders might obviously say otherwise) from the lower band (support) to the higher band (resistance) of the Pitchfork. Since hitting this October 2022 high, the USDCHF broke down and seems poised to resume its long-term downtrend, notwithstanding interim pullbacks.
2/
Novartis Breaks Out
Looking at Novartis’ steep decline from the February 2020 high to the March 2020 low, it took Novartis more than 4 years of sideways drift to “digest” that decline! This consolidation ended in July 2024 when the price was finally able to break above its February 2020 high, i.e. CHF 96.38.
To confirm this new uptrend, the price needs to stay above the breakout area of CHF 96.38 (on a monthly closing basis).
As for the next upside target, we can use the Fibonacci extensions to project it. Based on the above-mentioned decline, the next level comes in at CHF 115.72, followed by CHF 147, notwithstanding interim pullbacks.
3/
Understanding the RSI
If you ever find yourself staring at a chart, unable to find any price pattern, candlestick pattern and even a simple trendline won’t work as the higher lows (or lower highs) do not align to draw it, do not despair! The RSI can provide some information to confirm an uptrend or downtrend.
Givaudan is a perfect example.
During the mid 2017 to late 2021 uptrend, the RSI never went under 30 (oversold) and mostly oscillated between the lows of 40/50 to the highs of 80/90, known as a bullish range or bullish regime. Thereafter, during the price decline, from early 2022 to late 2023, the RSI never went above 70 (overbought) and oscillated between the lows of 20/30 to the highs of 50/60. This is known as a bearish range or bearish regime. The next price uptrend, between late 2023 to today, the RSI is currently oscillating between 55 and 77, which confirms the bullish regime of the stock price.
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Originally posted 10th September 2024
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