By: Mike Kulej
A few currencies have been clearly standing out during the past few weeks. The Australian Dollar and the Swiss Franc are the strongest among the major currencies, with both of them making new all time highs against the US Dollar, and a few others, too.
The relation between them has been shifting, though. Earlier the AUD-CHF sold off sharply, falling from 0.9800 to 0.8680, only to recover just as suddenly, climbing to 0.9480 in late March. Since then, the price settled into a consolidation, with a support at 0.9350 and a nearest ceiling at 0.9550.
Late on Tuesday, the support was broken and the price moved outside that congestion. This indicates the AUD-CHF turning bearish, at least on the intermediate term chart. If this breakout is for real, the drop could be large – the next support of any importance is all the way down at 0.8680.
The technical picture supports the possibility of a sell off. We can see the ADX, a trend indicator, already strongly up. In addition, the 100 SMA is starting to slope down, a positive sign in a bearish move. Now we need to see if the AUD-CHF follows through.