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Small Bull Signs in EUR/CHF Detected

22 May 2009

Following a mini up-surge in EUR/CHF in March, this cross rate became subject to a prolonged downward drift which has recently stabilized above the 1.5000 area. We had been prepared to see another upleg unfolding here, and an initial bull signal has just been given.

WEEKLY CHART: We currently view the slip back from 1.5447 Mar high as corrective, rather than impulsive, expecting another bull leg to appear. First resistance is offered by the falling resistance line at 1.5340 currently, but we are unsure how strong this will be. In any case, we would be targeting a better push higher than this.

DAILY CHART: Support from the 1.4991 20-Feb high has been very effective. In the FX Trading Guide we said that a close above the 1.5178 07-May high would be taken as a s/term bull signal/ trigger, and this has now happened. Beyond the 1.5340 mentioned above our initial focus would be on the 1.5447 16-Mar high and 1.5575 76.4% level. Also note the higher 1.5881/83 remains key (76.4% level and 15-Dec high) as there is now an equality target nearby too, 1.5575 (the 1.4576-1.5447 upleg extended from 1.5006 15-May low.

In the FX Trading Guide we said that buyers triggered by a close above 1.5178 may place initial stops just below 1.4991, targeting 1.5440 or 1.5550/75 for partial profits. This risk level is clear - a break below 1.4991 would negate the s/term bull scenario that we are currently painting.

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