- USDCHF on major down trend
- Multi timeframe analysis
- Bulls exhausted
- 100 Pip rejection
The USD CHF has been on a major long term down trend since October of 2000. There are about 10,000 pips from peak to trough of this trend. The trend line has been tested twice before on December of 2008 and may of 2006 on which times it successfully provided enough resistance to the bullish exchange prices.
From the monthly charts the 14 period moving average has just made a bullish cross on the candlesticks. This indicates that bullish momentum is about to pick up in the longer term view. We can thus anticipate that the exchange rate will meet significant buying pressures from the bulls taking this buy signal. This presupposes that we may see a break in the trend line.
The stochastic on the other hand, is indicating that we are at extremely oversold conditions. It is giving a reading of 92.30. From such a reading we ought to be anticipating the bulls to get exhausted in the short term and get a bit of consolidation or retracement. The RSI on the other hand is giving a neutral reading of 57.97.
On the weekly chart, the 14 period moving average is trading well below the candlesticks. This indicates that he bullish momentum will keep up in the medium term. It is however evident that this week, there has been a 200 pip rejection of the price as the exchange rate touched the major trend line.
The stochastic is giving a reading of 85.89. This is a bearish reading indicating that we are at overbought conditions. The RSI is reading 73.12 also indicating that we are at overbought conditions; under these conditions the bulls may get exhausted and let the price fall down further. Taking in to account the large bearish candle forming as the prices got rejected; we can anticipate that the rejection can become a larger retracement before we continue with the major up trend. Before taking this view howwever this we need to wait for the current candle to close.
From the daily chart, the 14 period moving average has been trading below the candlesticks. It has acted as a dependable support for the prices on four different occasions. The moving average is however about to make a bearish cross above the current candle. This is an indication that the bulls have become exhausted in the short term and we should see the prices slide down lower.
The stochastic is approaching the oversold region at a reading of 24.59. This should be taken as a neutral signal nonetheless. The RSI is at 60.86 which is also a neutral reading. The RSI has been moving in and out of the overbought conditions for the last month.
Seeing as how neither the 14 period moving average, the stochastic nor the RSI is giving any clear signal, we have to discount all their reading and wait for the exchange rate to give us further confirmation of where it will go on the daily chart. Should the Moving average complete a bearish cross a we can expect the price to fall.
The USDCHF as just hit a major trend line and we expect the priced to show more bearish moves. The technical indicators are however conflicting on most of the lower timeframes.
Under such conflicting conditions the best play is to wait for confirmation that the prices are willing to slide down further in the short term when the moving average makes its bearish cross on the daily chart and the a candle closes above it.
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