USD/CHF Breaks Support on Daily Chart

04/30/2009 12:01 am EST

Focus: FOREX

James Chen

Chief Technical Strategist, FX Solutions

(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)

Price action on USD/CHF, a daily chart of which is shown above, broke down substantially below a parallel uptrend channel on Wednesday (4/29/2009) in which it has been entrenched since late March. This breakdown was strong and decisive, and mirrors similar dollar-weakening moves against the other European currencies.

The channel breakdown coincided with a breakdown of the key 1.1400 support/resistance region. Currently, the 1.1300 level is another key support level. A significant breakdown below this level could sustain further bearishness targeting significant support in the 1.1100 price region. The 1.1400 level should now serve as upside resistance after being broken so decisively to the downside. 

By James Chen of FX Solutions

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