Swiss Franc - January 2011 Overview
SWISS FRANC TABLE OF SUPPORTS AND RESISTANCES
at market close - December 31, 2010
EUR/CHF
MONTHLY
The Euro-Swiss Franc has been in a strong down trend over the last three years, and has reached the lower trend line of the descending channel, where a bounce back up could be expected, however the pronounced downward momentum has crossed the 161.8% extension and we could see a break of the channel and continuation of the fall towards lower levels. A retracement to the upside would seek a retest of the broken support but we have a wide area of resistance between 1.3850 and 1.4270, thus a first target would be, conservatively, at the upper trend line level around 1.3760-1.3800, with expectations for the price to reach above 1.4200 if the channel is broken.
WEEKLY
Weekly charts also show the price at the lower trend line of the descending channel, with a potential for a further break and extension to 1.1800-1.1780 (about 161.8% of last swing low). Risk-to-reward ratio favors a bullish view, though, and if price bounces back up from the channel we would have a retest of the break at 1.2850-60 as a first target, then psychological level 1.3000 as a second target. If price turns effectively to the bullish side we could expect a break and continuation to resistance area between 1.3730 and psychological level 1.4000.
DAILY
Daily charts at the end of the year present a similar pattern and price has been consolidating just below the upper trend line of the descending channel. As of today, the channel has been broken and price went near psychological level 1.2700 and middle Bollinger Band, forming a double bottom. I would expect a further push to the SMA34 which is also the 38.2% Fibonacci retracement from this swing low, and a retest of the break at 1.2906. Further to the upside, we have the next strong resistance at around psychological level 1.3200.
GBP/CHF
MONTHLY
This pair has just broken the descending triangle on monthly charts, and we could expect a continuation to the downside towards a 127% extension of the last swing low as first target at 1.3560, then if bearish momentum is still strong we can see it going near psychological level 1.3000. However in view of the price action in the first days of the year, it is possible to see first a retest of the break and resistance formed at around 1.5150-55.
WEEKLY
Weekly prices have reached the lower trend line of the descending channel and 127% extension on the last swing low, and we can expect a bounce back to the upper line, which would coincide with a retest of the break at around 1.5130-50. If the resistance holds, we expect a continuation down below 1.4000 (138.2% extension) as a first target.
DAILY
Price has started the year by breaking the upper trend line of the descending channel after having formed a double bottom on last week’s close, and will probably continue to the upside to reach the middle line of the Bollinger Bands and possibly further to attempt psychological level 1.5200, near SMA34. Target resistance is inside the area between the 38.2% Fibonacci retracement at 1.5025 and the 50% retracement at 1.5214. I would favor 1.5100-10 as a conservative target, which corresponds to the price level of the break and mid-October double bottom.
USD/CHF
MONTHLY
The Swissie ended 2010 with a strong and steady push down all over December, piercing the consolidation area in which it had been evolving since 2008 in a slightly bearish trend. A further continuation down would see 0.8950 as a first target. On the bullish side, and if the recently broken resistance level at 0.9600 does not hold, we can expect the price to reach the next resistance at around 1.0980/1.1000 and upper trend line of the descending channel.
WEEKLY
Price action for this pair on the last week of 2010 broke down the descending triangle formation and a continuation should be expected. However we may see first a retest of the break (which as of today has already occurred) as the price reached the middle area of the channel. A further push up to test the strong resistance at parity level (1.0000/90) and SMA34 could be on the lines.
DAILY
2010 ended on a doji for the Swissie and we have since seen a turn back to the upside on the first days of 2011, reaching the upper trend line of the descending channel, testing the recently broken psychological level 1.9500. I would expect some continuation to the upside towards 0.9600 as a first target, then 0.9700/0.9800. Should the price reverse to a bullish trend, we can expect a retest of the highs just above parity. However, the risk-to-reward ratio favors a bearish view on this pair on the three time frames. Targets on the downside would be a retest of the lows at 0.9300, then as a second target the lower trend line of the descending channel at around 0.9200.
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