Forex Technical Update

Previous: USD/CHF Maintains Bullish Momentum (7/16)

USD/CHF 1H Chart 7/17/2012 8:10AM EDT


The USD/CHF fell during the 7/16 session, losing the bullish momentum as the RSI reading int he 1H chart fell below 40 and kissed 30. This introduces some bearish momentum, confirmed if the RSI fails to push above 60 and returns back below 40.

In the 1H chart we note that price action is trying to complete a double bottom right on top of the 0.9750 handle. Note that the second bottom has some longer tails to the downside. With a higher RSI low, we have what's called a bullish divergence, a sign that the bearish momentum may be exhausting.

To the upside, the 0.9792 pivot may be important. If the decline is to continue in an impulse wave structure (which has a stronger indication of further bearish attempt), then a hold below 0.9792 can clearly maintain this structure. A break back above 0.98 will muddy the bearish outlook, especially if the 1H RSI reading pushes above 60. Pushing above the 1H SMAs last of which is near 0.9815 should re-introduce the bullish outlook, especially if the RSI also pushes above 70.

To the downside, the 0.9735 pivot is key. A break below opens up the next key support at 0.9675, where we have a previous pivot as well as the projected rising support parallel to the resistance trendline. The 4H RSI is at 40. This means, if the market is to remain bullish in this time-frame, it should remain above 60, and we should see a rebound soon.

USD/CHF 1H Chart 7/17/2012 8:15AM EDT


July's bullish price action has exposed the parity level as noted in an earlier USD/CHF update.

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.

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.