Swiss Franc Medium-Term Overview – Dec. 5-10, 2010

The table below shows the Supports and Resistances and Risk-to-Reward forecasts obtained with the Forex AI platform calculator, for the major currency pairs that involve the Swiss Franc along with the Euro, British Pound and US Dollar. You will also find a Medium-Term Overview for this week along with the Weekly and Daily charts for EURCHF, GBPCHFand USDCHF.

Weekly and Daily Close = December 3, 2010
Monthly Close = November 30, 2010

SUPPORTS AND RESISTANCES

MEDIUM TERM OVERVIEW

EURCHF

Weekly charts on this pair show a bell-shaped descending channel followed by a wide consolidation area ranging nearly 1000 points, from 1.2850 to 1.3750 approximately. We have a double bottom and a fair rejection to bring the price above psychological level 1.3000, and I would expect a move back to the last highs, which also represent a 38.2% Fibonacci retracement of the whole leg own that occurred after a tight and relatively long consolidation period in the second half of year 2009. Prices will probably keep moving inside that range and the 50% next retracement level is at an area of quite strong resistance. If those levels are clearly broken, though, we would be targeting the next strong resistance level at around 1.4550 (January support, May resistance) though 1.4260, which is the 61.8% retracement point, shows a previous steady level of accumulation in last March and April and is therefore an area to watch closely as the price could stick there again for a while.

On the Daily charts we also have a bell-shaped descending channel that could continue down in extension to retest the previous lower lows of the range, however the steeper descending channel slightly resembles a falling wedge and if 1.3200 is clearly broken we could see prices try to get back to the upper line of the original channel. The targeted area, which was also a previous consolidation zone in the first half of October, would be between 1.3200 and 1.3400.

GBPCHF

Weekly descending channel has turned into a falling wedge, where it is quite possible for the pair to retest the lows and make a double bottom, reversing thereafter towards a first target at around 1.5860 where there is a strong resistance area to break before further upside. A break of 1.6600 psychological level would add a greater credibility to the formation of a new bullish trend. However we can still extend on the downside breaking the lows, looking for a 127 or 138.2% extension of the previous swing low (1.6600 to 1.5100).

On Daily charts the price is at the middle line of the descending channel, where we could bounce back up to the upper trend line (around 1.5800) to form the right shoulder of a H&S pattern which if realized and confirmed (having its neckline at around 1.5460) would bring us down to 1.5120 approximately. The bullish alternative would need a clear break of 1.6150 level before being truly considered as a reversal possibility.

USDCHF

The Swissie weekly wave is evolving inside a slowly descending channel with an ample range of about 2300 pips. It would seem that the price is now looking to reach the middle line at around 1.0700, which would represent a 50% Fibonacci retracement on the last swing low. The angle could however become steeper and we would have a barrier at 1.0330 level (1.0300/1.0400 resistance zone) which is the 38.2% Fibonacci retracement point of the swing. An extension to the downside is quite likely to find its way to 0.9250/0.9150 on the lower trendline of this channel.

Daily scope seems slightly bullish after a long descent, provided it bounces back up after retesting the broken upper trendline. A bearish continuation to retest the lows will need to break 0.9760, 0.9560 and 0.9460 to allow a further extension towards 0.9150 and 0.9000 psychological level. A retest of parity is my view for a first target, with next levels at 1.0180 and finally 1.0330/1.0340 just below mid-year consolidation.