Forex Technical Update
USD/CHF 4H Chart 8/23/2012 11:15AM EDT
The USD/CHF has been trading down a falling wedge since topping at 0.9970 on 7/24. The RSI reflects persistent bearish momentum as it has tagged 30, and remained below 60 for most part throughout August. The FOMC Minutes, which heightened anticipation for QE, softened the USD across the board, and the USD/CHF accelerated its decline below thesupport of the falling wedge.
The decline is probably better described in a falling channel instead, as seen in the daily chart below. We also see that the RSI broke below 40 in the daily time-frame, showing loss of the bullish momentum established during the March through July rally from 0.8930 to 0.9971
The correction of the 2012 rally has the 50% retracement level in sight at 0.9451. There is also a previous support pivot from end of June, beginning of July, at 0.9463. Below this support area, comes another support pivot and June low at 0.9420. It should be noted that the CHF is tacking EUR, so the USD/CHF is basically an upside-down mirror image of the EUR/USD until EUR/CHF finds direction (it is stuck around 1.20)
A pullback against this bearish outlook should first be limited in scope to 0.9660. If USD/CHF holds below, we are still clearly still in the downtrend. Only a break above 0.97 introduces possible sideways to bullish market in the short/medium term (ie for September).
USD/CHF Day Chart 8/23/2012 11:25AM EDT
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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