Forex Technical Update

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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.

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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.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.