- USD/CHF has opened a Runaway Gap higher at the open, suggesting the uptrend will continue.
- Volume is low, reducing the chances that the gap represents a point of exhaustion.
USD/CHF opened a gap higher at the open on Monday (see chart below) and then promptly fell back down. It has since closed the gap.
Despite the speed of the decline following the gap higher, the short and medium term trend is still probably bullish, which given the old saying that “the trend is your friend” is likely to continue.
USD/CHF 4-hour Chart
The gap is probably what would be classified as a “Runaway Gap”. These happen during strong rallies.
The lack of volume accompanying this gap (yellow rectangle on volume) indicates this is probably not an Exhaustion Gap which comes at the end of the trend. Price is, therefore, likely to continue rising.
A break above the 0.8700 level (October 28 high) would confirm a further extension to the 0.8750 resistance level (August 15 high).
The Relative Strength Index (RSI) momentum indicator is still not in overbought territory (above 70) suggesting the pair has room for more upside.
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