USD/CHF Weekly Outlook

USD/CHF's break of 1.0985 resistance last week argues that rebound from 1.0590 is resuming but no follow through buying was see after the pair reached 1.1021. Subsequent retreat sent USD/CHF below 1.0836 minor support and thus turned outlook neutral first. Some more downside might be seen initially this week but after all, with 1.0630 support intact, we;d continue to favor the bullish case that USD/CHF has bottomed out at 1.0590 already and hence expect rise from there to resume sooner or level. Above 1.0930 minor resistance will flip intraday bias back to the upside. Further break of 1.1021 will target 1.1158/1740 key resistance zone.

In the bigger picture, fall from 1.1963 is treated the third leg of the consolidation that started at 1.2296, which corrects the whole rally from 0.9634. With daily MACD staying well above signal line, such decline is tentatively treated as completed and hence, stronger rise is in favor to 1.1158/1.1740 resistance zone. Nevertheless, we'd favor that such consolidation is developing into triangle pattern and hence, upside should be limited by 1.1158/1740 initially and bring one more fall before completing the consolidation. However, break of 1.1963 will serve as the first signal that whole rally from 0.9634 is resuming. On the other hand, note that a break of 1.0590 low will indicate that fall from 1.1963 is still in progress for 1.0366, or even further to 100% projection of 1.2296 to 1.0366 from 1.1963 at 1.0033 before completing the consolidation from 1.2296.

In the longer term picture, a long term bottom is no doubt in place at 0.9634 with bullish convergence condition in daily MACD. USD/CHF failed to take out 55 months EMA and reversed again and thus giving no confirmation of long term reversal yet. We're neutral in the long term outlook for the moment and would wait for further evidence from the markets before making a stance.

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