By Russell Glaser – Heading into the monthly close, the USD/CHF is showing a bullish reversal signal in the long term downtrend.
Following last month’s breach below the bearish pennant pattern on the monthly chart, the dollar has rallied creating a bullish hammer. This candlestick pattern is identified by a long lower shadow with a small real body at the top. The candlestick is found at the bottom of a downtrend and the appearance of the hammer signals a potential bullish reversal in the downtrend trend. The candlestick pattern is similar to its bearish counterpart the hanging man.
Traders will need to wait for a close of the month to confirm the reversal signal.
Initial resistance is found at this week’s high at 0.9930. A potential target for any further appreciation in the pair may be found at the lower boundary of the pennant pattern at 1.0080. Traders should be aware that just as a support level turns into a resistance level; previously broken trend lines can serve as new resistance levels.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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