USD-CHF Could Resume Uptrend Soon

By: Mike Kulej

The Swiss Franc is increasingly getting the media’s attention. Even though it weakened in relation to most other currencies, it is still very close to historical extremes. This in turn, has brought on threatening rhetoric from the Swiss National Bank. Once again, the central bank is voicing its displeasure with the strong CHF, which implies possible intervention.

USD-CHF Forex Technichal Analysis 20-01-2011

Most market observers do not think that the SNB will act soon, since similar actions, last year did not produce the desired results. Nonetheless, the USD-CHF rallied from 0.9299 to 0.9783 in early January, in a move that could be a harbinger of a major reversal.

During the last few days, the USD-CHF gave back some of these gains, falling to 0.9519. This placed the price in the middle of the last up swing, in the cluster of the Fibonacci retracement levels, an area where reversals often happen. So far, this pair found support at the 50% level.

If the price moves below the 0.62% line, chances are that the downtrend will continue. On the other hand, should the USD-CHF climb back above the 0.38% level, the resumption of the preceding uptrend is more likely. That could lead to a retest of the 0.9783 high and perhaps even rally further.

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