USD/CHF:
Gold has fallen 10.59% since reaching its all time trading high on December 3rd. There has been a long standing historical positive correlation between the change in the price of Gold and the Swiss Franc. Over the same period of time the Dollar has had its best rally in more than 9 months.
The CHF has fallen 5.95% from its high struck back in November. During its descent, it crossed the following key technical points ; (a) The 50 SMA which has been holding support for the CHF over the last 9 months. (b) S1, S2, and S3, the near term Support levels. This breaks the prevailing trend of lower highs and lower lows. (c) The 100 SMA which had not been breached since April of 2009. (d) The Fibonacci Retrace level of 23.6% corresponding to a handle of 1.0402.
Those key technical breaches generated an obvious CHF Short entry signal. Our take profit target level is 1.0707. Currently, the 200 SMA, S4, and the Fibonacci Retrace level of 38.2% are all converging on the same handle of 1.07 (+/-). We would reduce our position at that level as 1.07 appears to be a strong level of support. If price handily takes out the 1.07 handle then we would expect to see price action push the CHF another 2.5 figures to 1.0945 before leveling off.
However, a candle below S2 or 1.0338which coincides with the 100 SMA would suggest a CHF Long entry. In addition, it would reestablish the 23.6% Fibonacci Retrace level as near term support. A close below the 50 SMA would trigger an additional Short entry. Continue to monitor commodity prices, specifically Gold. If Gold continues to sell-off during this Dollar rally then more key technical points may trigger more CHF selling.