USD/CHF Weekly Outlook

By IBTimes Staff Reporter | December 19 2009 6:04 AM

USD/CHF's rally extended further to as high as 1.0506 last week but formed a short term top there on bearish divergence conditions in 4 hours MACD. Initial bias is mildly on the downside this week and some pull back could be seen to 4 hours 55 EMA (now at 1.0333) and below. But after all, downside is expected to be contained well above 1.0175 resistance turned support and bring resumption of whole rise from 0.9916. ABove 1.0506 will target medium term support turned resistance at 1.0590 next.

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In the bigger picture, medium term fall from 1.1963 has completed with five waves down to 0.9916 already. Also, the three wave consolidation from 1.2296 should also be finished too. Current rise from 0.9916 is expected to extend further to medium term trend line resistance first (now at 1.1078). Sustained trading above the trend line will affirm the case that long term rise from 2008 low of 0.9634 is resuming for another high above 1.2296. On the downside however, a break of 0.9959 support will invalidate this bullish view and argue that medium term down trend in USD/CHF is still in progress for 0.9634 low.

In the longer term picture, a long term bottom is no doubt in place at 0.9634 with bullish convergence condition in daily MACD. USD/CHF failed to take out 55 months EMA and reversed again and thus gives no confirmation of long term reversal yet. We're neutral in the long term outlook for the moment and would wait for further evidence from the markets before making a stance.