Forex Technical Update

Previous: USD/CHF Completes ABC Correction at 61.8% Retracement (1/12)



Instead of advancing and extending the bullish mode USD/CHF has been in since July of 2011, the pair has found resistance at 0.9593 (right below 0.96). The daily chart shows a bearish divergence and the decline following through. Now, the RSI is heading back to 40, a break below which would suggest a loss of bullish momentum the pair has established since pushing above 70 in Sept. 2011. Also the decline will soon be testing the important support area just below 0.93.

Ability to break below 0.93 shows a successful topping attempt and the ushers in a bearish outlook in the short-term in the context of a corrective decline. The first target would be toward the 38.2% retracement at 0.8627, near the 200 day simple moving average. In the shorter time-frame, the 0.90 level could also serve as a support as a psychological pivot, also near the 23.6% retracement.

Looking at the 4H chart, we see at the momentum is bearish (RSI below 30), although this might be cause for a near-term correction to the upside. If we do get one, the bearish outlook can be further confirmed if the 0.94 handle is respected as resistance. After all, this was the previous support pivot, and near where the 200 4H SMA resides. The RSI should also stay below 60, preferably below 50 for the bearish outlook to be clear.

Failure to break below 0.93, and then return above 0.94 could be a sign of weak bears, and this topping attempt would be a failure so far.


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