Forex Technical Update
USD/CHF Daily Chart 5/24/2012 10:34EDT
The USD/CHF has been rallying sharply and is now back to where it was at the beginning of the year when the market made a 2012 high at 0.9593. In January the market fell from this area first to 0.9410, then all the way down to the 2012 low of 0.8927.
Here we are testing the resistance level again, and if we do get a drop here, I think the bearish outlook should be limited to 0.94 at max for now.
USD/CHF 4H Chart 5/24/2012 10:40EDT
The 4H chart shows the market in somewhat of a bearish divergence with the RSI ( I don't usually consider this a bearish divergence because it is from two different swings instead of within the same swing), and in a way with the bollinger band because it was able to tag it in the previous rally, but missed it during the recent swing from around 0.9365.
USD/CHF 1H Chart 5/24/2012 10:40 EDT
The 1H chart does show the type of bearish divergence I consider valid. A break below 0.9530 can start the topping process. Again, the maximum bearish target here is 0.94. traders might want to consider early trade management to lock in profit even before the market gets to this level in case the rejection from 0.9593 2012-high is a fleeting one.
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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