USD/CHF (daily chart) as of Tuesday (9/27/2011) has pulled back yet again in what is turning out to resemble a well-formed bullish trend characterized by strong breakouts to the upside interspersed with bearish pullbacks, or retracements. If price action continues this pattern of higher highs and higher lows, the uptrend that was started early in September on the strong breakout above the previous long-term 15-month downtrend, should gain further strength. After that breakout, price has gone on to breakout above progressively higher resistance levels, including the 0.8275, 0.8550, and 0.8900 price regions. The next major resistance level to the upside resides around the 0.9300 price region, which the pair targeted but was unable to reach late last week before correcting back to the 0.8900 region today. If the 0.8900 area is able to hold, price should once again target the 0.9300 level and a continuation of the new uptrend for USD/CHF. A breakdown of this level could presage a sideways consolidation for the pair going forward.
(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