Forex Technical Update
USD/CHF Daily Chart 5/21/2012 7:40EDT
The USD/CHF has rallied 13 out of the previous 15 daily sessions in an upswing that broke above a projected trendline and key resistance pivots. The RSI pushed above 70 and showed bullish momentum in the medium term, but in the very short-term, it is also an overbought signal. Also, we had a bearish candle from the 5/18 Friday session that dropped from 0.95 to 0.94. This candle was an outside bear and closed below the previous 2 candles.
At the moment a bearish outlook should be considered a throwback after a break out. There are possible support factors around 0.9250. For now, this should probably be the maximum target. If the market falls below 0.9146 (61.8% reracement, and the middle of the previous congestion pattern zone, we might have to shelve the bullish outlook, and consider a bearish/flat one.
USD/CHF 1H Chart 5/21/2012 7:46EDT
The 1H chart shows a market that appears to have topped off. The RSI tagged 30 and showed some short-term bearish momentum. Now, if the correction to the downside is to extend, the RSI should not come back above 60. The market found support near 0.9370, which was resistance during the May 14-15 consolidation. We are seeing a pullback in the 5/21 Asian-European session. This rally should stay below 0.9435 (50% retracement) to show bearish intent. A break above 0.9450 (61.8% retracement) can suggest that the correction is over, or is very flat if it extends sideways.
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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