USD/CHF (daily chart) as of Monday (10/17/2011) has stalled above key support in the 0.8900 price region, emphasizing this level as the current price region to watch for key events to occur. At the moment, that key event has been a slight bounce that has highlighted 0.8900 as the most important support/resistance area within the context of the current bullish trend that has been in place since the early September breakout above the previous long-term downtrend. 0.8900 has served several times in the past as a turning point both as support and as resistance. A continuation of the current uptrend would be the likely bias if price is able once again to reach towards its strong upside resistance target around 0.9300, which is another key support/resistance region that price respected in early October, less than two weeks ago. If instead there is a strong subsequent downside break below 0.8900, the current downtrend will have been placed in serious danger of trend change, with the next major downside target around the equally strong 0.8550 support/resistance price region.
(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