Forex Technical Update
Nearing 0.7850 Target:
- The US GDP data today was worse than expected, and the USD took it in the jaw immediately after.
- The USD/CHF sharp decline out of a pennant consolidation pattern reflects bearish continuation.
- When we look at the daily chart, we see that we had a swing projection to 0.7850, and the market is nearing this level.
- Expect the USD to pare some losses ahead of the debt ceiling vote on Tuesday. However, I would not consider reversal scenarios until a break back above 0.8265 - 0.8270.
Nearing 1.13 Target:
- The EUR/CHF was projected to 1.12920-1.1300 after a break below 1.1518. This is a swing projection, and the market is approaching this level.
- The Swiss franc is rallying across the board as an attractive safe haven currency. In these times of debt crises from US and the Eurozone, the CHF is a winner.
- The 4H chart shows some other fibonacci expansion targets going down to 1.1110 (161.8% extended retracement of the 1.1405-1.1891 rally.)
- The daily chart shows a swing projection to 1.1070. Therefore, the 1.1070-1.1110 area is the target for the decline below 1.1290.
1.28 Wave Equality:
- The GBP/CHF pair is also breaking new lows. This reflects the strength of the Swiss Frank during these times of uncertainty and risk aversion.
- Wave equality targets 1.28, and the market is still 100 pips above it. This reflects a little bit more resilience in the sterling than the Euro and greenback.
- Nonetheless, further risk aversion rising out of the US and Eurozone debt crisis can pressure the GBP/CHF indirectly.
- If risk aversion continues after the market hits and breaks below 1.28, te market has 1.2660 as a 161.8% extended retracement target as well.
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Fan Yang CMT
Chief Technical Strategist