The AUD/CHF pair initially broke higher during the session on Friday, but then turned back around to form a shooting star. This is the second shooting star in a row, and it appears that the market is ready to start falling. This is true in the AUD/USD pair as well, so I think it’s a valid signal. If we head down to below the bottom of the range of Friday, I think that the market then goes to the 0.7250 level. At that area, there should be a significant amount of support, based upon the fact that it was so resistive in the beginning of the month of January.
The 100 day exponential moving average is just above, and it has been rather resistive the last couple of times it been asked to be so. With fact, I think that the Swiss franc is going to continue to appreciate against some of the more risky currencies, and this chart only helps my theory on that.
Rallies will be selling opportunities
We have essentially made a lower high recently, and as a result I’m going to continue to sell rallies. I believe that short-term charts might be the way to go, because there is only a couple of hundred pips worth of space before we hit a significant support barrier. On top of that, I believe that we will ultimately break down below the 0.7250 level, and when we do it should be a rather significant and its importance and see money floods back into the market to the downside. I think it is not until we get above the 0.76 level that I could consider buying, which is probably something that I will not be seeing anytime soon.
If we do get below the support at the 0.7250 level, I think the market then heads to the 0.6850 level. That is a massive support area, but I believe that we will eventually sell off to the level as it was the area where the market started to rally from the Swiss National Bank announcement several months ago.
