USD/CHF traded higher on Monday, breaking above the 0.9157 barrier, which is near Friday’s high. This may have cleared the path towards some higher areas, but until we see a decisive break above 0.9230, we prefer to stay sidelined. The reason why a break above 0.9230 may be more significant is because such a move would confirm a forthcoming higher high and signal the completion of a double bottom formation.
If indeed the bulls manage to reach and breach the 0.9230 hurdle, the completion of a double bottom may also signal a trend reversal. We may initially see advances towards the 0.9290 zone, the break of which could extend the rally towards the 0.9370 area, which acted as a strong support from June 11th until July 21st, when it was violated to the downside.
Shifting attention to our short-term oscillators, we see that the RSI lies above 50 and points up, while the MACD stands above both its zero and trigger lines, pointing north as well. On top of that, there is positive divergence between both indicators and the price action. This implies positive momentum and enhances the chances for a double-bottom completion in the not-too-distant future.
On the downside, we would like to see a strong dip below 0.9055 before we start examining the resumption of the prevailing downtrend. Such a move would confirm a forthcoming lower low and would take the rate into waters last tested in January 2015, during the recovery of the slump triggered by the SNB’s decision to remove the EUR/CHF floor of 1.20. The next important territory to consider as a support may be the psychological round figure of 0.9000, the break of which may set the stage for declines towards 0.8900.
Disclaimer:
The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.25% of retail investor accounts lose money when trading CFDs with the Company. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please read the full Risk Disclosure.
Copyright 2020 JFD Group Ltd.