Yesterday, after breaking above a short-term downside resistance line taken from the high of April 5th, CAD/CHF made its way a bit higher, but found a strong hold-up near the 0.7360 barrier. From there, the pair corrected lower, but continues to trade above that downside line. The current short-term technical picture on our 4-hour chart suggests that the current correction lower might be seen as part of a bullish flag pattern. If that is the case, we would still prefer to wait for a break above the 0.7360 barrier first, before aiming further north. Hence our somewhat positive approach for now.
If, eventually, the rate ends up popping above that 0.7360 barrier, marked near the high of April 16th and an intraday swing high of April 19th, that would confirm a forthcoming higher high, potentially clearing the path towards higher areas. We will then aim for the high of last week, at 0.7393, a break of which could set the stage for move towards the 0.7420 hurdle, marked by the low of March 25th. Slightly above it lies another potential resistance level, at 0.7430, which is the low of March 29th.
Although the RSI is pointing slightly lower, it continues to oscillate around 50. The MACD, despite being below zero, is now running above its trigger line and points a bit higher. The two indicators seem to support the idea of standing pat for now and to wait for a pop above the 0.7360 barrier, in order to aim higher.
In terms of the downside, if the rate falls back below the aforementioned downside line and then slides below the 0.7292 hurdle, marked by the low of April 19th, that may attract more sellers into the game, potentially opening the door for further declines. CAD/CHF could then move to the current low of April, at 0.7251, a break of which would confirm a forthcoming lower low. If so, the pair might slide to the 0.7217 level, marked by the low of March 2nd.
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