Price action on USD/CHF, a daily chart of which is shown, has just dropped below significant support in the key 1.1400 price region. In the process of this drop, price has also just approached a key uptrend support line extending from the mid-April low.
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(Price on first pane, Slow Stochastics on second pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)
This occurs after an extended consolidation within the last several weeks between the 1.1400 support and 1.1700 resistance price levels, and within the context of an overall uptrend in this currency pair. With further bearish price action that ultimately breaks down below this uptrend line, the current strong uptrend will have been interrupted, and immediate downside support resides in the 1.1250 price region, which also coincides approximately with a key 38.2% Fibonacci retracement level. If price respects the current uptrend with a bounce off support, the key upside resistance target resides around the 1.1700 price region.
By James Chen, chief technical strategist, FXSolutions.com
