By Russell Glaser – The Swiss franc continues to rally against the dollar as the pair moved past parity and today has taken out the 2009 low in a sustained downtrend that shows further signs of continuing.
The swissie has been rallying, taking out multiple support levels on its way below the 1.0000 level. Signs of a trending market appear which may make for entry good opportunities on pullbacks in the price.
Using multiple moving averages, a trader can identify the USD/CHF is in a sharp downtrend. The 200-day, 100-day, 50-day, 20-day, and 10-day simple moving averages are in a perfect order, appearing from top to bottom in this order. This is one indication of a trending market.
Another sign of the trending environment is the ADX indicator which reads 33. Anything above an output of 25 indicates a currency pair that is in a strong trend.
The moving averages and the ADX indicator are not shown on the chart below.
Now that the trending environment has been identified, entry opportunities can be found on pullbacks to known resistance levels for the USD/CHF.
Resistance is found at 1.0060, the low from September 1st. Resistance can also be located at 1.0000. This is a big round number and traders have a tendency to flock to big round numbers.
The support at 0.9915, the 2009 low was taken out today and will now act as a resistance level.
Short term price targets can be found by drawing a parallel channel line below the price action for the current downtrend. Today traders can look for the 0.9870 to come into play.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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