Weekly   

• Last Candlesticks pattern: Hammer
• Time of formation: 08 Apr 2011
• Trend bias: Down

Daily    

• Last Candlesticks pattern: Shooting star
• Time of formation: 19 Jan 2011
• Trend bias: Down

EUR/CHF – 1.2061

Although the single currency has remained under pressure and the corrective decline from 1.2475 temporary top may bring retracement of recent upmove for marginal weakness, still reckon support at 1.2000 (SNB’s minimum rate) would hold and bring another rebound later. Above the Kijun-Sen (now at 1.2127) would suggest low is possibly formed and bring a stronger rebound to 1.2195-00 but a daily close above there is needed to signal low is in place, bring test of the Ichimoku cloud bottom (now at 1.2293). Looking ahead, only a sustained breach of the upper Kumo (now at 1.2301) would retain bullishness and suggest the correction from 1.2475 has ended and bring further gain to 1.2400 and possibly retest of 1.2475 which is likely to hold on first testing.

On the downside, only below the SNB’s minimum rate at 1.2000 would risk deeper correction to previous resistance at 1.1971 but break there is needed to abort and signal a temporary top has been formed, then further fall to 1.1912 (38.2% Fibonacci retracement of 1.1002-1.2475) and then 1.1840-50, however, reckon downside would be limited to 1.1730/40 (50% Fibonacci retracement of 1.1002 to 1.2475) and 1.1650 should remain intact, bring another rally later.
 
Recommendation: Hold long entered at 1.2050 for 1.2250 with stop below 1.1950

On the weekly chart, the single currency has continued to move lower and although near term downside risk remains for the retreat from 1.2475 to bring retracement of recent rise to 1.2023 minor support, reckon SNB’s minimum rate at 1.2000 would hold and bring another rise later. A weekly close above the Tenkan-Sen (now at 1.2237) would suggest the pullback from 1.2475 has possibly ended and bring a retest of this level. Looking ahead, break of this recent high is needed to extend the reversal from record low 1.0075 (where a long hammer reversal pattern was formed) for a stronger retracement of medium term downtrend to 1.2500 and possibly 1.2622 (50% projection of 1.1002-1.2200 measuring from 1.2023). A break there would extend headway towards 1.2762 (50% Fibonacci retracement of 1.5448-1.0075) but upside should be limited to 1.2898 (100% projection of 1.0075-1.1971 measuring from 1.1002).

On the downside, only a weekly close below SNB minimum rate at 1.2000 would defer and risk a stronger pullback to 1.1912 (38.2% Fibonacci retracement of 1.1002 to 1.2475) but downside should be limited to 1.1860/70 and price should stay above 1.1735-40 (50% Fibonacci retracement of 1.1002-1.2475) and bring another rise in later part of Q1 2012.