Forex Technical Update

Previous: USD/CHF Testing Support Trendline (4/26)



Looking at the daily USD/CHF chart, we see a market trading sideways after topping near 0.9570. The RSI being stuck between 40 and 60 reflects a consolidation mode. The range of this consolidation is between 0.9330 and 0.8930. Note also that the latest daily candle is starting to break below a rising trendline that goes back to Oct. 2011.

If the RSI reading also pushes below 40, we confirm bearish momentum. The near-term support pivot is 0.90, then the 0.8930 support, coincident with the 200-day simple moving average.

A break below 0.89 therefore would be a strong bearish sign, that can open up the support pivots at 0.8640-0.8650 and then 0.8560. For now, the bearish outlook is limited to 0.8930.

USD/CHF 5/1/2012 10:10 AM EDT


The 4H chart shows a market anchoring into a declining channel. If the market rallies back above 0.91 and above the channel the bearish outlook should be on hold. A rally above 0.9150 then opens up the bullish outlook, but again within the context of a sideways market with the bullish outlook limited to 0.9330.

As I get ready to post, the US ISM Manufacturing PMI improved to 54.8 from 53.4 beating expectation of 53.0. This is giving the USD a boost across the board, and for now, the break is failing, and the market is going to challenge the 0.91/channel resistance in the 5/1 US session. The immediate target is going to be 0.9130, with a break above 0.9150 opening up further short-term bullish scenario.

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Fan Yang CMT is a trader, educator and the Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.


Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.