Monday March 15, 2010 - 18:46:19 GMT
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FXTimes: Daily Technical Update USD/CHF Rounded Top and Bearish Outlook
USD/CHF Rounded Top and Bearish Outlook
- Weekly: I will start with the Weekly. The previous
week was a bearish signal after a few weeks of showing
spinning-top-type of candlesticks. This also comes in the context of a
completed bearish Gartley at the 50% retracement and nearing a
declining long-term trendline.
- The market was also overbought at this level, struggled and failed to break above 1.09.
- This weekly chart shows long-term bearish mode as the SMA50 is way
below the SMA 200. A swing projection in the direction of this mode
goes to the 0.9850/0.99 area, although the parity level might act as a
psychological barrier as well.
- Letâ€™s look at the daily for some confirmation to this outlook.
- Daily: The market has been rallying in a channel
from 0.9900 to 1.0900. The market has been developing a rounded top
throughout February and now at mid-March, we have a breakout below the
base or neckline if you consider this a complex head-and-shoulder.
- The break is strong, but we are now faced with some support. The
screenshot shows a test of the SMA50 and 38.2% retracement. at 1.06.
- More importantly though are the rising channel support and
powerline at 1.05. The current decline will be tested there and only if
the market breaks below should we consider the bearish scenario in the
- 4H: The daily shows that the market was oversold,
yet still very bearish. In the 4H time-frame, the stochastic shows the
market staying oversold after the break below.
- There is a pause now at 1.06, but continuation to 1.05 is very
likely. Note that the moving average alignment is now bearish with
SMA50 crossing under SMA200.
- A possible scenario is that there will be a bounce from 1.05. This
can be assessed as a pullback as it attempts to retest the 1.0650 area.
- A pullback from a strong decline such as the one shown last week
may not reach the 1.0650, and perhaps just test the 1.06 area. Either
way, if the market tops off and continues to be bearish, look for that
to break below 1.05. Then you have your confirmation for the bearish
outlook stated in the weekly.
Commodity Trading Advisor
Information and opinions contained in this report are for
educational purposes only and do not constitute an investment advice.
While the information contained herein was obtained from sources
believed to be reliable, author does not guarantee its accuracy or
completeness. CMS will not accept liability for any loss of profit or
damage which may arise directly, indirectly or consequently from use of
or reliance on the trading set-ups or any accompanying chart analyses.
Foreign currency trading is not conducted on an exchange. CMS is
acting as a counterparty to its clientsâ€™ transactions and as a result,
CMSâ€™ interests may be in conflict with its clients. Since CMS acts as
the buyer or seller in the transaction one should carefully evaluate
any trade recommendation provided by CMS or any of its solicitors.
Foreign currency trading involves a substantial risk of loss and may
not be suitable for all investors.
All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.
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