USD/CHF aggressively breaks swing low; faces uptrend line.

USD/CHF spiked above the twice tested resistance of 0.9950 and the upper Bollinger band last week, to touch the 200-day simple moving average (SMA). The pair then tumbled through the 0.9900 level, which is the 38.2% Fibo of the down move from 1.0235 to 96.93, before continuing past the 50-, 20- and 14-day SMAs as well as the 0.9820 level, which is the 23.6% Fibo. Sellers then fractured the 0.9805 support and lower Bollinger band, before resting at the uptrend line, presently around 0.9735.

The MACD has crossed below the red trigger line in the negative zone, where the RSI has broken the trendline and 50 level downwards and is headed for oversold areas. The ADX shows no definitive trend in place. It is worth mentioning that the SMAs are pointing downwards despite the short-term sideways move.

To the upside, if the trendline was to hold, initial resistance could come from the lower Bollinger band and the 0.9805 level, before 0.9820, which is the 23.6% Fibo. If the buyers pick up, the 14-, 20- and 50-day SMAs could provide some friction before the 0.9900 level. Further up, the region of 0.9950 – 0.9975 would need to be fractured.

If the selling interest gains strength and falls past the uptrend line, the 97.15 support, and 96.93 five-and-a half-month low barrier would be up for a test. If the price were to jump lower, the 0.9620 level could unfold from back in September 2018.

Summarising, the medium-term outlook seems to be neutral, but focus on a very short term bearish bias is cautioned, with the break below 96.93, otherwise, a move above 1.0000 will confirm the neutral view.


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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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