USD/CHF Daily Chart 11/4/2012 9:18M EST
Trendline Breakout: The USD/CHF had a strong day on Friday after a strong October NFP data of 171K new jobs compared to the 125K average forecast by economists. This boosted the US Dollar against the Swiss Franc. This rally also comes as a bounce off a previously broken trendline resistance. The next focus is now the recent range resistance around 0.9430, which was a support pivot back in June.
Range-bound: The break of the trendline reflects a change to the bearish trend defined by the swing from 0.9971 2012-high to October’s low of 0.9213. However, the change was from bearish to sideways so far. Note that the daily RSI reading is just under 60. A break above reflects a loss of the bearish momentum, but a hold between 60 and 40 is consolidation momentum.
Breakout targets: A price break above 0.9430 and the daily RSI pushing above 60 will be signs of a bullish breakout. This will clear above the 200-day SMA, which removes a condition of bearishness. A couple of short-term targets are the 38.2% retracement of 0.9503, which was a previous support pivot. 50% retracement is just under 0.96 handle, and 61.8% retracement at 0.9681 is in a previous resistance/support pivot area. A range breakout target (using the width of the range projected from the break point) is around 0.9620.
Failure: I consider the central pivot to be around 0.9330. A break below this refocuses the USD/CHF to the support area of the recent range, and shelves the bullish breakout scenario.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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