(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend line in red; Fibonacci retracements in grey; 50-period simple moving average in light blue.)
5/12/2008 – EUR/CHF – The EUR/CHF daily chart, as shown, has just bounced up off a steep, short-term uptrend line (labeled 1 on the chart) that exists within the larger context of a rising wedge formation. In turn, this rising wedge exists within the context of the medium-term downtrend (represented by the red resistance line) that commenced after the October 2007 reversal of the previous long-term uptrend. At the current juncture, because the pair is in a medium-term downtrend and within a rising downward-continuation wedge, the technical event to look for is a clean breakdown of the steep short-term uptrend line at 1. If this occurs, major support to the downside resides around the very long-term dynamic support/resistance trendline labeled 2. This level also coincides approximately with a key 38.2% Fibonacci retracement level (the low-to-high retracement span being measured from the long-term low reached on 3/17/2008 to the last swing high around 5/5/2008).
Chief Technical Analyst
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