| USD CHF Technical Overview |
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| Wednesday, 26 January 2011 22:12 |
The weekly chart for USDCHF pair shows how a major bearish channel has organized the descending movements as seen on the chart below.
 The fluctuation inside this channel carried the movements to the upside and to the downside according to the nature of trading inside price channels. We can see how the last move followed testing the resistance line of this channel around 1.1730, which was recorded in the last week of May. Consequently, we expect that the pair will continue its southern trip inside the descending channel from the resistance line to the support line around 0.6900 levels. Let us discuss the bearish technical factors, where it started with touching the downtrend line or rather the resistance line of our channel. SMA 50 is acting as a ceiling for the time being, where trading stabilized below it and it became a short term resistance. Looking deeper at the daily chart, we will get more bearish signs as we can see a previous pivotal broken support -turned into a key resistance- at 1.0050. The successful retest for this level proves its strength, since the minor ascending channel that organized this retest action couldn't assist the pair to surpass this initial resistance level and that added further negative pressure on the pair. Thus, we look at this minor channel as a "Flag" pattern, which is a continuation pattern, indicating that the bearishness will resume.  Back to the weekly chart, we can notice that Stochastic is showing obvious bearish signs, supporting the potential bearishness; targets start with touching 0.8850 followed by 0.8300 areas and later 0.6900 will be the main technical objective. Resuming the bearishness over medium term basis depends on the weekly and monthly closings below 1.0050 and the psychological levels of 1.0000. A break of these levels, accompanied by a stable move above them will open the door for additional ascending movements, which will be correctional moves for the last bearish wave that started at 1.1730 and it could send the pair towards 1.0865 and maybe towards 1.1350. This positive scenario is based on passing over the retest level, as if that occurs it will complete a bullish pattern with a neckline at 1.0050-1.0000, helping the pair to confirm the corrective rally, targeting 50% Fibonacci retracement at 1.0600, which meets the technical targets of the pattern. The extended targets reside at 1.0865, followed by 1.1350 zones. By: Yasir Mubarak Senior Technical Analyst Risk Manager |
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There is substantial risk of loss in trading commodity futures, options and off-exchange foreign currency products. Each investor must consider whether this is a suitable investment.
Trades or trade recommendations made on this site have not been made by Georgia Anderson.
Trades or trade recommendations made on this site have not been made by Georgia Anderson.
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