(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; downtrend lines in red; 50-period simple moving average in light blue.)
6/25/2008 – USD/CHF – Within the context of the long-term downtrend on the USD/CHF daily chart, as shown, price has settled into a slightly downward-sloping range consolidation. Though this parallel range is more than 300 pips wide, it is still considered a tight consolidation because it occurs on a longer-term daily chart. During consolidations that are tight, watching for breakouts is usually a more prudent direction than trading the range. In view of this, technical traders will be watching this pair for a break on either side, up or down. But because it is a descending range that follows a recent short-term run up from the long-term lows around 0.9640, there is a slight technical bias towards an eventual breakout to the upside. If this indeed occurs with momentum, the next resistance level to the upside resides around the 1.0600 region, and then ultimately at the long-term downtrend resistance line represented by the top red line.
Chief Technical Analyst
IMPORTANT NOTICE: These comments are for information purposes only. The information contained on this document does not constitute a solicitation to buy or sell by FX Solutions, LLC., and/or its affiliates, and is not to be available to individuals in a jurisdiction where such availability would be contrary to local regulation or law. Opinions, market data, and recommendations are subject to change at any time. Forex trading involves substantial risk of loss and is not suitable for all investors.