Forex Technical Update

Previous: USD/CHF in Short-term Bullish Breakout (9/24)

USD/CHF 4H Chart 9/24/2012 7:10 AM EDT

USD/CHF 9/24/2012

The USD/CHF had a classic bottom formation, breakout, throwback, and confirmation, as seen in the 4H chart. After breaking above 0.93 and the consolidation resistance, the pair found resistance around the 0.9340 pivot, falling back to the 0.9285 area. The return to the rally confirmed the market’s respect for the bottom, and intent for further corrective rally.

The ability to clear 0.9350 exposes the 0.94 psychological pivot to 0.9420, previous resistance pivot. Above this are, we open up the 0.9480 pivot to 0.95 psychological and actual former support pivot. As the USD/CHF approaches these latter levels, price might also be approaching the declining trendline seen more clearly in the daily chart, and the 200-4H-SMA, which is at the moment closer to 0.9535, but is declining.

The bullish outlook toward 0.9480-0.95 is one of regression back to mean price from oversold conditions. The 4H RSI shows that the bearish momentum is broken by cracking 60 (more so if the RSI can tag 70). This shows the market is in sideways to bearish instead of just bearish, which would make the case for regression weak. Still even with bearish momentum loss, we should monitor 0.94-0.9420 first before the 0.9480-0.95 target. Note in the daily chart that 0.94 is coincident with the 200-day SMA. This is not a resistance per say, but is a highly monitored moving average in the daily and weekly time-frames.

At this point, a return below 0.93 would make the above bullish scenarios unclear, with focus possibly back to the downside.

USD/CHF Daily Chart 7:12AM 9/24/2012

USD/CHF 9/24/2012 Daily chart

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

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