Wedge on USD/CHF Daily Chart Shows Opportunities
02/13/2009 10:59 am EST
Price action on USD/CHF (a daily chart of which is shown) has been consolidating in a rising wedge formation for the past several weeks. Currently around the vertical middle of this wedge, the pair has recently been wavering in indecision. This consolidation can be seen as a lull before an inevitable directional push. Momentum oscillators like the displayed Stochastics are hinting at a bearish bias.
Triggers for possible long and short opportunities occur at the wedge borders, as well as at coinciding horizontal support/resistance levels. To the upside, the top wedge border resides around the key 1.1800 support/resistance region, a significant breakout above which price could eventually target recent long-term highs around 1.2300. To the downside, just beyond the bottom wedge border is the 1.1500 support/resistance level, a significant breakdown below which price could target further support around 1.1280.
By James Chen, chief technical strategist, FX Solutions