Monday March 10, 2008 - 16:42:36 GMT
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USDCHF Long Term Overview
The last move down of the USDCHF pair was in the magnitude of what people can call "shock and awe". It is easy to feel an urge to enter and trying to catch the "falling knife" in such developments.
For those investors, that think the pair has arrived to the end of the road down, we show this long term chart (monthly). The following technical points are telling us that the drop has some more way to go, after a rebound from the current oversold situation:
1. The depth of the moves down in the prior breakdowns from previous important support levels is shown here in the black rectangles: 2650, 2280 and 2020 pips. If we set our current goal to 2000, we see that the price has to arrive to a target between 0.90-0.95.
2. The Fibonacci projections related to the previous descent from 1.825 to 1.130, give us 0.96 (123.6%) and 0.86 (138.2%) as possible end-points.
3. The intersections between these Fibonacci numbers and the lower boundaries of the two current descending channels (violet ellipses), are our preferred places because of their technical combination.
4. If you look at the RSI (9 month), it is much oversold. But notice the behavior of the previous drops. It rebounds and crosses back over 30 but never reaches 50 before going oversold again. All the chances are that we will see the same action until the price will get to its lowest level.
The exhaustion type move in the pair is telling us that the end is near, but it seems that there is one more move down after the relief of the oversold status. The crossing up of the 20 SMA could be the first sign of the end of this bear campaign.
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