Next Stop for USD/CHF Daily Chart

06/29/2010 12:01 am EST

Focus: FOREX

James Chen

Chief Technical Strategist, FX Solutions

Price action on USD/CHF, a daily chart of which is shown, has displayed strong bearishness in the last three weeks, which highlights the recent dramatic strengthening of the Swiss franc. As of Monday (June 28), price action has established a new eight-week low and has descended all the way back down to the region of a key uptrend support line extending from the November 2009 low below parity.

Click to Enlarge

(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 trend line touch occurs after price dropped successively below several important support levels within the past three weeks, including 1.1400, 1.1250, 1.1000, and 1.0900. The drop was strong and swift and reflects the recent Swiss franc strengthening that can also be seen in the current all-time low hit in EUR/CHF. In the event of further bearishness in USD/CHF that breaks down and closes significantly below the noted uptrend support line, bearish momentum in this currency pair could potentially target further key downside support levels in the 1.0650 and then 1.0500 price regions.

By James Chen, chief technical strategist,
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