Wednesday's FOMC statement, which implied possible lower benchmark rates for longer-than-expected by market participants, triggered some volatile moves in the Forex market. On Thursday, SNB's decision to hold its benchmark interest rates in negative territory and commitment to prevent CHF to appreciate fueled further volatility in CHF pairs.
Given the backdrop, here is a technical update on important CHF pairs - USDCHF, EURCHF, AUDCHF and CHFJPY.
After nearly erasing majority of its loss witnessed post SNB's decision to scrap EURCHF base of 1.20, the pair on Wednesday dropped sharply towards 0.9600 mark just to rebound back. The pair currently is holding comfortably above 23.6% Fib. retracement level of 0.8431 to 1.0127 up-move near 0.9900 mark. Should the pair continue holding above 0.9840-20 immediate support, it could possibly make a fresh attempt to re-test 1.0000 psychological mark resistance. Further, a decisive move above could easily lift the pair back towards 1.0100 mark resistance and eventually towards 2015 highs resistance near 1.0200 mark. Alternatively a drop back below 0.9840-20 support could drag the pair immediately towards testing 0.9730-20 support area, marked by 23.6% Fib. retracement level. Moreover, a decisive drop back below 23.6% Fib. retracement level now seems to exert additional near-term pressure and take the pair towards testing 38.2% Fib. retracement level support near 0.9500-0.9480 area.
The pair is reversing from 1.0800 level, marking 50% Fib. retracement level of its big fall on Jan. 15 and is currently hovering around 1.0600 mark representing 38.2% Fib. retracement level. Sustained trade below 1.0600 mark and a subsequent drop below 1.0460-50 support is likely to trigger some accelerated downfall back towards 1.0200 mark support area, also coinciding with 23.6% Fib. retracement level. Meanwhile on the upside 1.0650-70 zone, followed by 1.0740-50 area, now seems to provide immediate resistance for the pair. Decisive strength above these resistance levels, now seems to set the stage for extending the near-term recovery towards 50% Fib. retracement level resistance near 1.0850 level.
Although on 4-hourly chart, the pair seems to be trading within a well-established ascending trend-channel, it is currently trading close to the lower trend-line support of the channel, currently near 0.7550-30 zone. This support area also coincides with 23.6% Fib. retracement level of sub-0.6900 to 0.7742 up-swing witnessed since Jan. to March 2015. Hence a break below this immediate support area is likely to accelerate the downfall towards 0.7420-0.7400 support area marked by 38.2% Fib. retracement level. However, until the pair continues holding the lower trend-line support, it could possibly make an attempt to retest 0.7650-70 immediate horizontal resistance, which if conquered could lift the pair beyond March 2015 high towards testing the upper trend-line resistance of the ascending channel, currently near 0.7830-50 region.
Following a break below its previous strong resistance turned support near 124.20-124.00 area, the pair dropped to re-test 120.00 psychological mark support. Although, the pair seems to have found support near 120.00 mark area, it might still find it difficulty in moving back above 124.00-20 strong resistance area. From current levels, 122.80-123.00 area and 121.10-121.00 zone area likely to act as immediate resistance and support levels respectively. A break on the upside seems unlikely, however, a decisive strength above 124.00 mark resistance could immediately lift the pair initially towards 126.00-20 intermediate resistance, with the upward trajectory expected to continue till 130.00 psychological mark resistance. Meanwhile, a break below 121.00 and a subsequent weakness below 120.00 mark seems to extend the ongoing weakening trend towards testing 117.00 mark support area.
Senior Market Analyst
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