USD/CHF (daily chart) as of Wednesday (10/05/2011) has continued to display a strong bullish bias in line with the new bullish trend that has been in place since the prior long-term downtrend was broken to the upside in early September. After that trend breakout, the new uptrend has been displaying the characteristics of a well-formed and technically-behaving bullish trend, reaching for progressively higher resistance levels while retracing back down to key support levels. These retracements and trend continuations have taken the form of at least two flag continuation patterns that have proven useful in describing the current bullish trend. Most recently, after having broken out above key 0.8900 prior resistance, price action pulled back down to bounce at that level, this time as support, and is now targeting its current immediate upside target around the 0.9300 resistance region. On a breakout above 0.9300, the next major upside resistance target resides around the 0.9500 price region, which not only represents an important prior support/resistance level and psychological price level, but is also around the 161.8% Fibonacci extension of the last major bearish run.
(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