EUR/CHF (daily chart) as of Monday (10/31/2011) has continued its fall towards the significant 1.2000 psychological support level after having turned down two weeks ago from an important long-term downtrend resistance line extending from the December 2009 high and the key 1.2400 price region. After having hit the high above 1.2400 two weeks ago, price action broke down below a steep uptrend support line extending from the early August low just above parity (1.0000). The fact that the pair both respected the long-term downtrend resistance line as well as almost simultaneously broke down below the counter-trend uptrend support line, stands as a significant bearish trend indication. With upside resistance continuing to reside around the noted long-term downtrend resistance line, the key downside support target to watch continues to reside around the 1.2000 support/resistance psychological level.
(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)
James Chen, CTA, CMT
Director of Technical Research and Education