Forex Technical Update July 19, 2010  USD/CHF: Stalking Retracement Pattern

  • Daily: The USD/CHF has been in a free-fall since hitting the 1.1750 area. The end of last week and beginning of this week saw the USD/CHF in sideways action, or a correction, or maybe finding a bottom.
  • In the daily, we saw Friday's candle attempt to match Thursday's decline. The start of this week is looking to continue this rally. In the daily, it is not clear if the market is simply in a correction or if it is winding up for a reversal.
  • The RSI shows a bullish divergence coming out of very oversold area, suggesting there should be a some what a strong correction, but also suggesting that the market is very bearish.
  • Let's look at the lower time-frame to stalk this retracement.

  • 4H: The 4H chart shows that the market is in a short-term bullish attempt. The candlestick action suggests there should be at least an equality in the current swing compared to the previous. This swing projection brings the pair to 1.0585. This is between 61.8% and 78.6% retracement zone of the most recent downswing.
  • The market may turn to a ranging mode after such long period of trending markets, up from April to June, then down from June to now. These were sharp moves as can be seen in the daily chart, and I susupect the volaility may enter a narrowing cycle.
  • This means, intra day trader's who factor in the daily range for target projection should consider reducing the expectation of target.
  • In anycase, I would like to see what kind of action occurs after the Gartley or AB=CD retracement. If price action turn extremely bearish again and shows no sign of narrowing volatility, then I would supect the market to eye the 1.03 area.
  • Otherwise, if the volatility eases instead,and the market to find a range in the next couple of weeks.

  Fan Yang Currency Analyst Commodity Trading Advisor

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