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.
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.
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.
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