Forex Technical Update
- After a zig zag, the market headed south. However, without breaking below our previous low at 0.7608, this can still be just bear trap for further consolidation, or even a reversal (more likely consolidation).
- This scenario sets up range trading between roughly 0.76 and 0.78. A break above eyes 0.80, a break below targets 0.74 (new record low)
- The ranging scenario is really missing another test of 0.78. There are already a few attempts establishing support just above 0.76.
- The 1H chart above shows the market with a completed abc correction, followed by a 3 wave decline that completed a wave (1).
- The structure thus suggests bearish continuation. But the RSI has not dipped back below 30 to confirm with momentum.
- Still, the 0.7730 is an important resistance level near 61.8% retracement, and has held so far.
- The market even within the current sideways action appears bearish.
What about the NFP?
- The NFP was better than expected (119K vs 89-91K forecast) and the unemployment rate was edged lower to 9.1% from 9.2%. However, it would probably take a 200K+ number to convince markets that the US is in position to recover.
- Thus as a safety currency rival, USD might still lose to the CHF.
Can the Swiss Franc keep going since the SNB is "dealing" with the high currency level and not really trying to intervene in the traditional sense? Subscribe and become a member to share your views and join live discussions as well as webinars about the markets.
Fan Yang CMT
Chief Technical Strategist