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USD/CHF Break Out Levels...

Last updated 10/7/2009 5:18 PM EST (GMT -5) 4 Comments

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FX360 Technical Analyst Staff

Technical Analyst, GFT

Having been in an aggressive downtrend over the past several months, the USD/CHF may have found a bottom as prices recently found 78.6% support of the near year-long 2008 rally (XA leg on weekly). However, bear trendline resistance poses a major obstacle and may lead to some near-term consolidation/congestion. In other words, bearish momentum in the face of significant support suggests the swissy is at something of a crossroads. Based on this longer-term price action, it would take at least a few weeks to determine/validate a potential trend reversal, but a drop below 78.6% support would likely trigger a drop down to converging support around .9930. This level is defined by the 88% retracement of XA along with the 127.2% extension of BC, which gives us a bullish Gartley pattern and an increased probability for at least a temporary bullish reversal near point D....

(chart 1 of 3)

Taking a closer look at more recent price action, we're seeing some nice price symmetry which provides some solid break-out levels no matter which direction the market moves. To the upside, we have an emerging bearish Gartley pattern (beginning with X1) along with an intertwined butterfly pattern (beginning with X2) projected to complete near 1.05 or 1.06 (see chart below). They key will be for prices to stay above 1.2040 supports (point C at 78.6% of AB), and move above near term resistance above between 1.037-1.04 (61.8%-78.6% of AB)....

(chart 2 of 3)

If near-term resistance between 1.037-1.05 holds, and prices drop below 1.240 support (78.6% of AB), then a potentially strong bearish continuation move may be in progress initially down to bullish butterfly pattern completion (point D) near 1.0110 followed by 1.0017 (see chart below)....

(chart 3 of 3)

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Comments (4)

harpreet

October 07, 2009 at 06:27 PM ET

Hi Roger,

I am a new trader if you can clear me, you means to say it will go around 0.9606 and then it will pull back. Or from this point it will move there is end of bearish move.

Thanks

rstojsic

October 07, 2009 at 06:45 PM ET

Hi Harpreet, i have no idea if it will move up or down....it all depends on what happens next...if prices break below 1.0240 would likely send prices lower...first to minor support at 1.0110-1.0017 (short-term), and perhaps down to major support near .9609 (long-term). If prices instead move higher above 1.0405, then we may see it go up to resistance near 1.05-1.06 (short-term). Hope this helps!

harpreet

October 07, 2009 at 08:06 PM ET

Thanks Roger really appriciate that.

rmsuleman

October 09, 2009 at 10:33 AM ET

Harpeet oyt! Chado FX aur bhago!

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