Swiss Franc Nearing Critical Resistance
11/17/2010 12:01 am EST
Price action on USD/CHF (a daily chart of which is shown) as of Tuesday (November 16) has formed the beginnings of a parallel uptrend channel after having recently broken out above a steep, long-term downtrend extending back to the June high, and then dropping down to an all-time low around 0.9463 in mid-October.
While the previous downtrend has certainly been broken and interrupted, a reversal cannot be confirmed, as price has not yet completed a reversal pattern. A strong break and close above the 0.9930 price region, a key support/resistance area, would confirm that reversal pattern and a continuation of a potential new bullish trend.
In that event, further upside resistance targets reside around 1.0060 followed by the 1.0300 price region. Dynamic downside support resides around the bottom of the new uptrend channel.
By James Chen, chief technical strategist, FXSolutions.com