USD/CHF Technical Analysis – Candle Warns of a Pullback
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- USD/CHF Technical Strategy: Flat
- Support: 0.8851-59 (61.8% Fib exp., trend line), 0.8829 (50% Fib exp.)
- Resistance: 0.8896-0.8914 (76.4% Fib exp., Apr 4 close), 0.8956 (100% Fib exp.)
The US Dollar may be setting up for a correction downward against the Swiss Franc after prices produced a dramatic Shooting Star candlestick below resistance in the 0.8896-0.8914 area, marked by the 76.4% Fibonacci expansion and the April 4 close. Near-term support is at 0.8851-59 region, bracketed by the 61.8% level and a falling trend line set from September 2013. Pushing below that targets the 50% Fib at 0.8829. Alternatively, a push through resistance aims for the 100% expansion at 0.8956.
A Shooting Star candle is a sign of indecision and doesn’t amount to a strong-enough signal to enter short. Furthermore, the stop-loss to be used on a short implied by the Shooting Star’s long upper wick argues against selling the pair on a risk/reward basis. With that in mind, we will remain flat for now.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.