CAD/CHF corrects upwards as engulfing candle stops losses.
CAD/CHF buyers halted the pair’s move down just before 0.7250, which is the 138.2% Fibo extensions of the up leg from 0.7350 to 0.7610. The subsequent recovery moved the price above the 0.7350 resistance, where the market has now adopted a sideways approach in an area of around 20 pips.
The momentum indicators show that the very short-term corrective move up may be losing steam. The MACD has started to flatten above its red trigger line, whereas the RSI could not break above the 50-level and hovers just beneath pointing slightly down. Despite the view, the RSI cautions for a reignited move south as confirmed also by the 50- and 100-day simple moving averages (SMAs) bearish cross of the 200-day SMA.
Breaching again below the 0.7350 support could repower the bears to test 0.7250, which is the 138.2% Fibo extensions, once the recently formed 0.7265 low is surpassed. If the bears continue to conquer, the 0.7200 – 0.7190 region may unravel with the latter being the 161.8% Fibo extensions.
To the upside, if the price manages to close above the 0.7372 previous swing high, resistance could come from the 0.7400 psychological number, where the 50-day SMA and the 38.2% Fibo lie. If the bulls take the wheel, the inside swing low of 0.7468 may come into focus marginally below the 61.8% Fibo.
Summarising, the short-term outlook remains bearish, but a move above the 0.7400 level could turn it back to neutral.
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