USD/CHF Weekly Outlook

USD/CHF's choppy fall from 1.0897 extended further to as low as 1.0506 last week before recovering mildly. While such fall was deeper than expected, there is no change in the view that it's a correction in the larger rally. Hence, in case of another decline, downside is still expected to be contained by rising trend line support (now at 1.0485) and bring rise resumption. Above 1.0646 minor resistance will suggest that such correction is finished and will flip intraday bias back to the upside for 1.0809 resistance for confirmation.

In the bigger picture, medium term correction from 1.2296 should have completed with three waves down to 0.9916 already. Current rise from 0.9916 is tentatively treated as resumption of the long term up trend from 2008 low of 0.9634. Sustained break of mentioned medium term trend line resistance (now at 1.0818) will further affirm this view. In such case, we'd be looking at stronger rise to 1.1963/2296 resistance zone in medium term. On the downside, sustained break of rising trend line support (now at 1.0485) will suggest that rise from 0.9916 is completed. The three wave corrective structure will in turn argue that another low could be seen below 0.9916 before USD/CHF makes a bottom.

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 gives 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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