USD/CHF Weekly Forecast

USD/CHF recovers to 1.1761 last week but after all short term outlook remains unchanged. With a short term top formed at 1.1883, some more consolidation should be seen before resuming rise from 1.0366. Having said that, while some recovery cannot be ruled out initially this week, upside should be limited by 1.1883 and bring another fall. Below 1.1592 will flip intraday bias back to the downside for 1.1313 cluster support (38.2% retracement of 1.0366 to 1.1883 at 1.1304). Though, downside should be contained there and bring up trend resumption. On the upside, however, break of 1.1883 will suggest that consolidation has completed earlier than we thought and rise from 1.0366 has resumed for 1.2296 high.

In the bigger picture, current favored interpretation is that medium term rise from 0.9634 has topped at 1.2248 orthodox top rather than 1.2296. In other words, three wave structure of the fall from 1.2258 to 1.0366 argues that it's merely a correction in the medium term up trend. The impulsive five wave structure of the rise from 1.0366 to 1.1883 supports is also consistent with the case that it's resuming medium term up trend. Having said that, decisive break of 1.2248/2296 will confirm medium term up trend resumption for 1.3283 resistance next. On the downside, though, break of 1.0864 support will dampen this case and turn outlook mixed.

In the longer term picture, the outlook is rather mixed for the moment. A long term bottom is no doubt in place at 0.9634 with bullish convergence condition in daily MACD. However, USD/CHF is still maintaining the pattern of lower highs (1.8305, 1.3283, 1.2296) and failed to sustain above 55 months EMA. We're prefer to wait for at least some sustained trading above the 55 months EMA before committing to the bullish outlook.

Based on ActionForex.com Technical Outlook