USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 1.0511; (P) 1.0552; (R1) 1.0592; More

USD/CHF's retreat from 1.0623 dragged 4 hours MACD below signal line, indicating that an intraday top is in place. Focus now turns to 1.0422 support. With bearish divergence condition in 4 hours MACD as background, break of 1.0422 will argue that the whole rise from 0.9634 may be over. Further decline should then be seen to lower channel support (now at 1.0157) first. However, another rally is still mildly in favor as long as 1.0422 support holds. Break of 1.0623 will indicate whole rise from 0.9634 has resumed for 161.8% projection of 0.9634 to 1.0249 from 0.9887 at 1.0902.

In the bigger picture, firm break of 1.0352/83 resistance zone (50% retracement of 1.1105 to 0.9634 at 1.0370 and 38.2% retracement of 1.1596 to 0.9634 at 1.0383) indicates that decline from 1.1596 has completed and a medium term bottom is probably in place at 0.9634 . Sustained trading above 55 days EMA (now at 1.0341) supports this case too. Further rebound should then be seen to resistance zone of 1.0890 to 1.1596. With 38.2% retracement of 1.3283 to 0.9634 at 1.1028 inside the range, strong resistance should be seen there, at least initially.

On the downside, break of mentioned channel support will add much credence to the case that rise from 0.9634 has completed. Further break of 0.9995 will confirm this case and bring retest of 0.9634 low. Also, this will leave the rise from 0.9634 in corrective three wave structure which in turn suggests that whole down trend from 1.3283 is still in progress.

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