Swiss Franc Monthly Overview - April 2011

Weekly updates: April 01/05 close.

EURCHF

March candle for this pair went back to December 2010/January 2011 lows and retraced again to the upside, reaching one more time the upper trend line of the falling wedge and closing slightly above the 38.2% Fibonacci retracement level on the November/December 2010 swing low. We maintain our views for a 61.8% retracement to look for another test of November 2010 highs at around 1.3800/15. On April 1 the resistance and channel top was broken and the outlook for this month seems bullish.

Last Friday, the price went through former resistance and broke above both the weekly middle line of the Bollinger bands and the upper line of the descending channel, closing barely above the SMA34. On the Daily charts, price closed at the exact level of the SMA200. The broken level at 1.3040 was retested and bounced off yesterday. Its attempt to break 1.3200 was rejected though, and we are presently in a consolidation mode between 1.3100 and 1.3200, but still above the daily SMA200 and weekly SMA34. 1.3200/50 is a strong resistance area but if the pair succeeds in breaking above, next level to expect would be around psychological number 1.3500, then 1.3560 as the 261.8% extension on the daily whole swing high from March lows, 1.3650/70 (November 2010 highs) and 1.3800/10 (October 2010 highs). Should price fail to break through the resistance, we would be aiming back down to 1.2910/1.2880 where we have a confluence of the daily SMA34 and SMA100 and would represent the 38.2% Fibonacci retracement on the swing high, and the middle line of the weekly Bollinger bands.

GBPCHF

March prices have been evolving inside the descending channel for this pair, making a new low at 1.4246 from where it was rejected, recovering about half of its fall. Given the present price action, I would expect a rise towards the upper line of the channel, at around 1.5330/50 for a 38.2% Fibonacci retracement, and a possible break to reach 50% at 1.5680 or further, to the middle line of the Bollinger bands.

Last week was again bullish after the rejection from the lows two weeks ago, and the pair will most probably aim higher towards 1.5330 (actual level of the weekly SMA34 and daily SMA100) and 1.5500 (top line of the weekly descending channel). Friday candle closed above the daily SMA34 and level 1.4880/1.4900 which has been holding earlier this week and was broken yesterday, reaching near March highs at 1.5190/1.5200 but presently rejected and seemingly going back to retest the recently broken level. Should it hold as support, and after a clean break of 1.5200, next levels to watch are 1.5400/30 (January highs) and 1.5690/1.5700 (February highs).

USDCHF

March candle ended as a pin bar still to be confirmed with this month’s price action, however given the wedge pattern and the previously observed Wolfe Wave weekly pattern, we can expect a continuation to the upside for a break of the upper line of the wedge and 50% correction on the swing low, around 0.9500. Price already reached 38.2% retracement on Friday, but is presently retesting support at 0.9160. I still expect the correction to parity and middle line of the Bollinger bands, in a longer term view and based on the Wolfe Wave expected time/price.

Weekly charts show a 50% correction on the previous swing low, closing slightly below the 38.2% level. On Daily charts, price pierced the SMA34 on Friday but was rejected below and is still trading between that level and the middle line of the Bollinger bands. I think that 0.9150 should hold and we would then be aiming for a retest of the 0.9340 level, where we have a strong resistance area delimited by January and February lows, and March highs. If the resistance breaks, we would be aiming to reach 0.9500/30 which is the 138.2% extension of the range of the former daily swing low, and the daily SMA100, as well as the top line of the weekly descending channel and middle line of the Bollinger bands. We maintain our views for a completion of the Wolfe Wave pattern on a longer term approach. However, should the actual support area weaken, we could have another attempt for a retest of the lows near 0.8900.