USD/CHF Weekly Outlook

USD/CHF's rally continued last week and rose to as high as 1.1416 but upside momentum is seen diminishing with bearish divergence conditions in 4 hours MACD and RSI. Retreat from 1.1416 dragged 4 hours MACD below signal line again, indicating that an intraday top is in place. Initial outlook is neutral this week with bias mildly on the upside for short term rising trend line support (now at 1.1129). Break will confirm that a short term top is formed and bring deeper pull back. Nevertheless, downside should be contained by 1.0882 cluster support (38.2% retracement of 1.0010 to 1.1416 at 1.0879) and bring rally resumption.

However, note that there is no confirmation of a short term top before breaking of the trend line support, above 1.1416 will indicate that recent rise is still in force for 1.1596 medium term cluster resistance (161.8% projection of 0.9634 to 1.0623 from 1.0010 at 1.1610.) before making a top.

In the bigger picture, medium term outlook remains bullish with USD/CHF staying well above 55 weeks EMA and weekly MACD staying positive. The whole rise from 0.9634 is still expected to extend further to test next two cluster resistance, 1.1596 (161.8% projection of 0.9634 to 1.0623 from 1.0010 at 1.1610) and 1.1878 (61.8% retracement of 1.3283 to 0.9634 at 1.1889). On the downside, sustained trading below 1.0632 support will raise the odds that whole medium term rebound from 0.9634 has completed and will put focus back to trend line support at 1.0184.

In the longer term picture, multi-year down trend from 1.8305 (00 high) looks shaky with possible bullish convergence condition in monthly MACD and monthly RSI on verge of breaking the down trend. Focus will be on above mentioned 1.1596 and 1.1878 cluster resistance levels and sustained trading above will add strong evidence to the case of a long term reversal. Stronger long term rally should then be seen to 1.3283 resistance and above.

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