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AUD/CHF Deeper Sell-Off to Offer Favorable Entries

AUD/CHF Deeper Sell-Off to Offer Favorable Entries

Talking Points

  • AUD/CHF posts outside-day reversal off December high
  • Immediate focus lower- broader bullish invalidation 7060
  • Updated targets & invalidation levels


Chart Created Using FXCM Marketscope 2.0

Technical Outlook: AUDCHF posted a massive outside-day reversal off the December high today with the decline eyeing near-term support at the confluence of the 2016 open, former trendline resistance extending off the September 2014 high and basic trendline support off the February low at 7283. Note that the daily momentum profile has seen multiple defenses of the 40-threshold with this week’s breach above 60 keeping the broader focus weighted to the topside.

That’s said, near-term we are at risk for a deeper cut here with a break lower targeting confluence Fibonacci support at 7243/50 and 7144/53. Our bearish invalidation level is set at the 61.8% retracement at 7058/66. Resistance stands at the December high-day reversal close at 7439 with a breach above 7547/54 putting the long bias back in play targeting 7635 & 7770.

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AUDCHF 30min

Notes: Today’s rally failed precisely at confluence resistance with the ECB sell-off charging a break of the weekly opening-range lows. Our immedaite focus is weighted to the downside sub-7439 (selling rallies) with support targets eyed at 7284 & 7242/48. Keep in mind a sliding parallel converges on this region into the open of next week and could provide more significant support.

Ultimately we’ll be on the lookout for long-triggers lower down with a breach above 7440 targeting the December close high at 7510 & 7546/54- again a break here would be needed to put the broader long-bias in focus.

A quarter of the daily average true range yeilds profit targets of 27-30 pips per scalp. Event risk for the pair is limited into the close of this week but we’ll be closely eyeing key releases next week with the FOMC & SNB interest rate decisions and Australian employment data likely to fuel added volatility.

Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount!

Check out SSI to see how retail crowds are positioned as well as open interest heading into February trade.

Relevant Data Releases

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.