Friday, August 23, 2019
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Technical Analysis – CAD/CHF corrects upwards

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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Disclaimer:
This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.


Source: XM

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