USD/CHF May Find Support Soon
04/14/2011 6:00 am EST
The US dollar has fallen fast against the Swiss franc with little sign of stopping or reversing, but a closer look at the chart reveals what could be an important level of support for traders to monitor closely.
The Swiss franc is nearing two important areas on the daily chart. First, it is nearing a parallel support line at about 8650 at the end of this week. It is also around the midpoint of its current downward channel.
As I wrote previously, “With momentum so strong to the downside, I am zooming out to a monthly (view) to get an idea of how low the USD/CHF can go in the event of a break to a record low. There are no points of reference to gauge support until a downward sloping support line which is not until the low 80’s (8300 this month). 9020-60 is short-term resistance.”
I have now found what could be support prior to the lows 80’s.
The latest break back toward the recently established fresh record lows below 0.9000 (0.8910) is certainly concerning and threatens our longer-term recovery outlook.
Still, we do not see setbacks extending much further and continue to favor the formation of some form of a material base over the coming weeks for an eventual break back above parity.
Look for the market to hold above 0.8950 on a daily close basis, while back above 0.9075 will officially relieve immediate downside pressures and accelerate gains.
Only a break and weekly close below the recent record spike lows by 0.8900 ultimately delays this outlook.By Jamie Saettele, senior technical strategist, DailyFX.com