USD/CHF 4H Chart: Channel Down
Comment: There are two conflicting signals emerging at the moment. On one hand, there is a bearish channel developing since March, and it implies a sell-off from 0.95, where the upper boundary of the pattern coincides with the monthly PP and 200-period SMA. On the other, the pair has made two distinct bottoms near 0.91, and this implies a breach of the May 12 high with a follow-up rally beyond 0.95. The technical indicators do not bring clarity into the situation, but given the seniority of the parallel bearish trend-lines, the chance of supply at 0.95 withstanding the buying pressure is higher than the probability of a break-out to the upside.
CHF/JPY 4H Chart: Double Top
Comment: Although because of almost perfectly horizontal price chart of USD/JPY correlation between CHF/JPY and USD/CHF should be close to negative 1, the first Franc-cross seems to have a higher chance of forming a reversal pattern than USD/CHF. Here the potential decline beneath the neck-line (May 11 low at 128.24) will have around 200 pips of free space before it encounters a significant demand area. The sell-off will probably end around 126.25, where the monthly PP merges with the 200-period SMA, without making it all the way to the start of the Apr 29-May 7 rally, namely to 124 yen. Meanwhile, the sentiment is moderately bearish, with three fifths of the traders holding short positions.
This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.
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