EUR/CHF, GBP/CHF, CHF/JPY Break Patterns for Further Correction of CHF Strength

The Swiss Franc seemed to be the more determined mover today, not the USD, as you may expect because of Bernanke?s leaving out QE3. Perhaps after the media has talked about this possibility for the past couple of days already, the market just does not find it surprising and is back to wondering where the USD should go with no new clues. The CHF market however, was a determined mover today. The USD/CHF rallied sharply out of its range. We also observe breakouts in EUR/CHF, GBP/CHF, and CHF/JPY for further correction of Swissie-strength.

EUR/CHF

EUR/CHF was ranging, and saw quieter price action as it ranged below 1.1550. Today after the temporal pivot in Bernanke?s Jackson Hole Speech, the Swiss Franc fell, and the EUR/CHF pushed above the 1.1550 resistance, hitting a high of 1.1734.

The 4H chart shows the market rallying further away from the SMA 200 after crossing it with the August rally.

It is also pushing the RSI back above 70 reflective of a bullish continuation.

Next important pivots above are the July 22 high at 1.1891, then the July high near 1.2380, which would also coincide with the 200SMA in the daily chart as well as the support from Dec. 2010, and March 2011.

A break below 1.13 however puts this bullish scenario on the shelf, for further sideways or even bearish correction (if the market then holds below 1.13).

GBP/CHF

The sterling has been two-face as it was the mover last week with it?s strength. This week it stood out with bearish bias as other currencies ranged.

But even so, the CHF?s weakness today is across the board, and the GBP/CHF is showing a break above a wedge type of consolidation.

The breakout is not true until we close above 1.32. Then as wee see in the daily chart, we have the 1.3260 pivot. Above that we see the 1.3430 pivot in the short-term.

Then we are looking at 1.3613. These are all conservative bullish targets.

However, a more significant resistance is at the 1.4150 level.

A break back below the 1.30 psych level, can invalidate the bullish outlook, and return the pair for further consolidation. After the V-shape reversal in EUR/CHF and GBP/CHF, traders might treat another attempt at the record lows as an opportunity to buy since QE3 is off the table for now.

CHF/JPY

The CHF/JPY is showing strong signs of bearish continuation from the slide that started from a high of 108.68. After spending some time in symmetric triangle from mid-August to the end of the month, the market is pushing lower aggressively.

Note that the RSI was kept below 60, and now confirms bearish continuation momentum tagging 30.

Price action also stayed below the 200SMA after breaking below it, and is now moving further.
The daily chart shows that this decline is now hammering at a support zone between 94.00 and 94.40.

The next target below that is 91.30, which coincides with the 200SMA in the daily chart.
If we then break below the 90 psych support, we are opening up a longer term downtrend.

Source: http://www.fxstreet.com/technical/forex-strategy/daily-technical-update/2011-08-26.v06.html

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