We just opened a buy forex signal in EUR/CHF. This pair has been moving lower in the last few trading sessions, but we decided to go the opposite way, so let’s list the reasons why we went long.

• Go with the trend

This is basically the main reason why we opened this forex signal, as it should be. We know the main rule in forex is to follow the trend. The trend has been bullish for a long time on this pair and last week it picked up the pace further.

• Wait for a retrace.

As we know, waiting for a retrace lower on an uptrend is much safer that just jumping in at any time. So, we waited for the retrace which happened in the last two days and now we are long.

The H4 chart is well oversold, so the retrace lower should be over soon

• Oversold charts

Basically, we based our trade on the H4 chart. The stochastic indicator is oversold here. As you can see, the price has reversed back up and resumed the uptrend whenever stochastic was reached oversold levels. The H1 chart is even more oversold.

• 50 SMA providing support. 

As you can see on the H4 chart above, the 50 SMA (yellow) is providing support around the 1.17 level. This is a round number which makes it a big level in itself. But, the 50 SMA is standing around there as well, so it adds more strength to this area.

Safe haven currencies have received some strong bids at year end and the Swiss franc is about 100 pips better off against the USD in the last two trading sessions. But we think that the uptrend will resume soon, given all the bullish technical indicators above.