AUD/CHF Hits .8600 Support, Rally to Resume

Last updated 6/16/2009 12:49 PM EST (GMT -5) 0 Comments - Add your comment

FX360 Technical Analyst Staff

Technical Analyst, GFT

The AUD/CHF hit trendline support near .8600 overnight in what is shaping up to be an 8hr rising wedge formation. Within this rising wedge formation we have an emerging bearish butterfly pattern projected to complete at converging fib resistance near .8850 followed by .8950 in which case there is a higher probability for at least a temporary market reversal at point D. These longer-term resistance levels may serve as potential profit targets for any bullish position, and/or a potential entry/stop-loss for new shorts. Since this emerging 8hr bearish butterfly pattern may take a few days to complete, and prices are still close to the would-be point C at trendline support (which acts as a logical stop-loss to the upside), we can look to shorter intraday timeframes for emerging bullish patterns.

Although in the very early stages of development, the 30min AUD/CHF shows what could be an emerging bullish gartley pattern. Ideally, we would like to see the ABCD pattern develop over the next few hours and complete near 61.8% or 78.6% of in which case we would have a prime buying opportunity. However, considering the amount of support near the recent bottom near .8600 (point X on 30min), a buy .near .8655-.8620 (61.8%-78.6% of XA on 30min) still makes sense in terms of risk/reward since a move below point X (.8589) suggests a potentially strong bearish continuation move may be in progress (making for a logical stop-loss placement).

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  • 8hr Chart - Emerging bearish butterfly pattern projected to complete near rising wedge resistance...
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  • 30min Chart - Ideally looking for bearish Gartley pattern to emerge and complete near 61.8%/78.6% support of XA...move below point X suggests potentially strong bearish continuation move may be in progress

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