CAD is trying to fight back against CHF

After marking a new low on Tuesday, CAD/CHF reversed sharply to the upside and seems to want to continue in that direction for now. That said, the upmove could only be a temporary occurrence, as the pair is still trading below the tentative short-term downside resistance line drawn form the high of the 16^th of November, which could limit the upside.

A confident break above the 0.7450 barrier could open the door for CAD/CHF to re-test the 0.7470 obstacle, a break of which might push the rate even higher. This is when more bulls could get excited and join in the action, as it could increase the chance for the pair to move towards the 0.7515 zone, which acted as a good inside swing low of the 4^th of December and is also near the inside swing high of the 29^th of November. This is where the rate could stall for a while, as CAD/CHF would meet the aforementioned downside resistance line.

Looking at our oscillators, the RSI and MACD, both are somewhat in support of the upside scenario. The RSI has pushed above 50 and is pointing upwards. The MACD, after bottoming in the beginning of December, managed to get back to its zero line, and currently is balancing around there.

Alternatively, a drop back down below the 0.7415 level could spark fears among the bulls and CAD/CHF could slide towards the 0.7375 hurdle, a break of which might lead to further declines. The bears may then decide to drive the pair towards this week’s low, near the 0.7352 area, for a quick test. If this time that support fails to withhold the rate from moving further down, this could clear the path towards the lows seen in the first days of September.

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