USD/CHF 4H Chart 10/4/2012 10:35AM EDT
Flag – continuation? When you zoom out to the daily chart, this rising channel is more like a flag pattern. The break below the flag signals resumption of the previous downtrend that has been developing since the 0.9970 high in July. This is not a “trend” in the larger degree, but more like a downswing after a bull run that started in Aug. 2011. Therefore, the bearish outlook although stay alive, should be limited.
Bownside targets: The first target to the downside is a retest of the current low near 0.9240. This was a previous resistance pivot turned support. Below 0.9240, the next support pivot in the 0.9050-0.9055 area, seen as support on May 1.
This bearish outlook does not look good if the market is able to hold above 0.93, and push back above 0.9360, and looks even more evident as a false break if price climbs back above 0.94, in which case, the focus remains on a possible break of the declining channel from May.
USD/CHF Daily Chart 10:40AM 10/4/2012