Student’s Question: Ok, I now have attached my picture of the daily USD/CHF chart. You can see the rising trend of the pair over the last several months. It seems to have been traveling in a pretty decent channel over that time and now looks to be forming a bit of a wedge. I notice that both the RSI and MACD are negatively diverging at this point and the pair looks set for a fall. Do you believe I am accurately interpreting what the charts and indicators are telling me?
Power Course Instructor’s Response: I would agree with your interpretations of the charts...divergence is definitely present. Negative divergence is when the market makes a higher high but the indicator does not. In this instance, one should look for possible selling pressure. Positive divergence is when the market makes a lower low but the indicator does not. In this instance, one should look for possible buying interest. The above being said, keep in mind that the trend on this USDCHF pair is still bullish...to the upside. So, should a retracement occur, we would be waiting to identify an entry to take a long position...perhaps on a retouch of the trendline in red on the chart below.