• Last Candlesticks pattern: Shooting star
• Time of formation: 7 Mar 2017
• Trend bias: Sideways
• Last Candlesticks pattern: Morning star
• Time of formation: 9 May 2017
• Trend bias: Near term up
USD/CHF – 0.9650
Despite last week’s initial rise to 0.9766, as the greenback has retreated again after faltering below recent high at 0.9773, suggesting the rise from 0.9438 low is not ready to resume yet and further consolidation would be seen, hence weakness to 0.9583 support cannot be ruled out, however, if our view that low has been formed at 0.9438 is correct, downside should be limited to 0.9540-50 and bring another rebound later. Above 0.9700 would bring another test of 0.9773 but only break there would revive bullishness and extend the rise form 0.9438 low to resistance at 0.9808. Looking ahead, a break above this level is needed to retain bullishness and encourage for subsequent rise to 0.9845-50 (61.8% Fibonacci retracement of 1.0100-0.9438).
On the downside, whilst initial pullback to 0.9583 cannot be ruled out, reckon downside would be limited to 0.9540-50 and bring another rebound later. Only a daily close below support at 0.9490 would abort and signal the rebound from 0.9438 has ended instead, risk retest of this level, once this support is penetrated, this would indicate recent decline from 1.0344 (2016 high) has resumed and extend weakness to 0.9390-00, then towards 0.9330-40.
Recommendation: Long entered at 0.9600 stopped profit at 0.9640 and would stand aside for this week.
On the weekly chart, dollar’s retreat after faltering below resistance at 0.9773 formed a candlestick with a long upper shadow, suggesting further consolidation below 0.9773 would be seen and although weakness to 0.9583 and possibly 0.9540-50 cannot be ruled out, as long as said support at 0.9438 holds, prospect of another rebound remains, above 0.9773 resistance would add credence to our view that a temporary low is possibly formed at 0.9438 last month, bring retracement of recent selloff to 0.9805-08 (current level of the Kijun-Sen and previous resistance), above there would provide confirmation, bring subsequent gain to 0.9845-50 (61.8% Fibonacci retracement of 1.0100-0.9438) and possibly test of the lower Kumo (now at 0.9894) but price should falter below psychological resistance at 1.0000, bring another decline later.
On the downside, expect pullback to be limited to 0.9583 and 0.9540-50 should attract buying interest, bring another rise later. Only a drop below support at 0.9490 would abort and suggest the rebound from 0.9438 has ended, bring retest of this level later. Once this recent low is penetrated, this would signal the decline from 1.0344 (2016 high) is still in progress and may extend weakness to 0.9350, then towards 0.9290-00, however, loss of near term downward momentum should prevent sharp fall below 0.9250 and reckon 0.9200-10 would hold from here, risk from there has increased for a rebound later.