Forex Technical Update July 27, 2010  USD/CHF Establishing a Bottom

  • 4H: Following up with yesterday's update, Assessing Possible Bottom, indeed a rally emerged from the 50 period moving average in the 4H chart. The rally is strong, so the projected path of the rally from yesterday's post should be revised.
  • We could extend the current rally to 1.0630 and complete a 100% swing projection.
  • If the rally continues, there is more resistance at 1.068/70 area. Then there is more resistance that could exist as the SMA 200 and 161.8% expansion.
  • So basically, the pair is establishing a bottom but after such a strong decline in previous weeks, the market has a lot of resistance just above. The logical thing to expect is some declines from there as the market may still be bearish or at least ranging. However, if these levels break easily, that should be a very strong signal that the market is both cover shorts and putting on longs.
  • One more note is that the RSI is rising above 60, a violation of bearish momentum. It is at least suggesting ranging action if not bullish.

  • Daily: The daily chart shows the market coming out of a bottom after a bullish divergence. We see that unless the market breaks above 1.07, there is a negative reversal (RSI high getting higher while price high staying lower or equal). A break above eyes 1.09, 38.2% retracement of the entire downswing.
  • The resistance may also be a factor of 50 period moving average in the daily.

  Fan Yang Currency Analyst Commodity Trading Advisor

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