AUD/CHF traded higher on Tuesday, after it hit support near 0.7055 on Monday. On the 4th of January, the pair emerged above the downside resistance line drawn from the peak of the 3rd of December and since then, it has been printing higher peaks and higher troughs. Thus, although the rate is still trading below the long-term downside resistance line drawn from the highs of January last year, we would adopt a positive stance with regards to the near-term outlook.
Currently, the rate is testing Friday’s peak of 0.7105, the break of which would confirm a forthcoming higher high on the 4-hour chart and may allow the bulls to drive the battle towards the 0.7150 zone. Another move higher, above 0.7150, could carry more bullish implications, perhaps opening the path for the 0.7195 area, marked by the high of the 13th of December.
Shifting attention to our short-term oscillators, we see that the RSI rebounded from slightly above 50 and now looks to be heading towards 70, while the MACD, already positive, has bottomed and now appears ready to move back above its trigger line. These indicators suggest that the latest recovery is gaining back momentum, which corroborates our view for AUD/CHF to continue trading north for a while more.
On the downside, we would like to see a decisive dip below 0.7030 before we start examining whether the bulls have abandoned the battlefield, at least in the short run. Such a dip would place the rate back below all three of our moving averages and could trigger declines towards the 0.6970 zone. If that zone fails to halt the slide, then the bears may put the 0.6935 territory on their radars.
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