(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; downtrend lines in red; uptrend lines in green; Fibonacci retracement levels in grey; 50-period simple moving average in light blue.)
4/03/2008 EUR/CHF Currently entrenched in a relatively well-defined, medium-term downtrend channel (as represented on the accompanying EUR/CHF daily chart), price has now approached the upper downtrend resistance line. Thus far within this channel, price action has been characterized by steep drops separated by intermittent consolidation zones. These consolidations are represented on the chart by the short, green support lines. Depending on the way this chart is interpreted, these consolidation zones may also be viewed as pennant or flag continuation patterns. In any event, recent history within this channel has suggested that breakdowns below these consolidation support lines have yielded substantial pip returns on subsequent drops. Therefore, a breakdown below the current green line may once again present an opportunity to short the pair. Also contributing to a possible downward bias is the resistance imposed by the 50-period SMA as well as the fact that Stochastics are well overbought. In the event of an impending downward break with follow-through, there is strong long-term support in the region of the last swing low around 1.5300.
Chief Technical Analyst
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