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Market Analysis

Home » Featured » CHFJPY – Next Leg Lower Underway

CHFJPY – Next Leg Lower Underway

Posted by FXTimes in Featured - August 24th, 2015 9:23 am GMT

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Technical Bias: Bearish

Key Points

  • Swiss Franc traded lower against the Japanese Yen, as the latter one got weakened recently.
  • Japanese Leading Economic Index released by the Cabinet Office increased from the last revised reading of 106 to 160.5 in June 2015.
  • Japanese Coincident Index was also released, which posted a rise from the last revised reading of 111.3 to 112.3 in June 2015.

Technical Analysis

The Swiss Franc after completing a consolidation pattern moved lower and traded towards the 127.40-20 support area against the Japanese Yen. There was an expanding triangle pattern formed on the hourly chart of the CHFJPY pair, which was cleared by sellers to take the pair lower.

CHFJPY

The pair traded as low as 127.34 where it found buyers. It is currently correcting higher and facing a resistance around the 38.2% Fib retracement level of the last drop from the 129.03 high to 127.34 low. Moreover, the 100 hourly simple moving average is also around the mentioned Fib level, waiting to act as a hurdle. Any additional gains could take the pair towards the broken triangle area, which can be seen as the next barrier.

If the CHFJPY pair moves lower from the current levels, then the last low of 127.34 might be tested. A break below it might call for more losses in the near term.

Japanese Leading Economic Index

Earlier during the Asian session, there were a couple of releases in Japan. The first one was the Leading Economic Index, which is an economic indicator that consists of 12 indexes such as account inventory ratios, machinery orders, stock prices and other leading economic indicators released by the Cabinet Office. The outcome was above the expectation, as it rose to 106.5 from the last revised reading of 106 in June 2015.

Similarly, the Coincident Index rose to 112.3 from the last revised reading of 111.3.

Trade Idea

We can attempt a sell trade if the CHFJPY trades closer to the 100 SMA (4H).

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