Today the markets favored the upside for CAD/CHF, with intentions to test the 0.8060/85 resistance and position the pair in this area ahead of tomorrow’s busy news schedule, which includes the Canadian Trade Balance, expected to come at 0.2B.
Technical Analysis
Following the rejection from 0.8060/80 resistance, CAD/CHF slipped lower in search of a good support. The major 0.8000 handle appeared to keep prices in check, but eventually the pair dipped to 0.7969, finding support on the 200 Simple Moving Average on the 4H timeframe. The 38.2% Fibonacci retracement level on this recent upswing is also located in that area. A continuation of the upswing with such a small retracement would suggest traders are winding down their short positions at a fast pace. 0.8222 remains the first target above the current pivot zone.
While the 50-Day Moving Average no longer offers resistance, CAD/CHF has to stabilize above 0.8060 for the bullish sentiment to remain strong. If the pair fails to make a new high in the coming sessions, a deeper pull back towards 0.7962 and 0.7911 is likely. A drop below 0.7911, the 61.8% Fibonacci retracement on the upswing, would invalidate almost all present bullish scenarios for the pair.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets
