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Bears in USD/CHF Are Losing Interest

21 August 2009

An earlier downmove in USD/CHF effectively came to a halt at the start of June, a choppy consolidation then ensuing. Bulls have so far failed to take the initiative but, for now, shorter term downside may well be limited…

The breach of the medium term bear channel top projection was a hint that long term bears were losing momentum, despite the subsequent deep pullback.
This was supported above the 76.4% retracement – it is unclear now if latest weakness will extend this far.

Choppy action has been a clear feature here recently - a type of final ‘downleg’ in process perhaps.
The bear channel top has been very effective resistance, but a small break of this could prove deceptive, so we keep in mind the higher 1.0934 30-Jul high too and a further channel top projection around 1.1000 (with 1.1020 24-Jun high just above) – all this must be cleared to break free of the consolidation/bear phase and confirm a bull phase underway.
Meanwhile, on the downside, we currently have two Fibo projections at 1.0435/10, above the 76.4% level on the Weekly chart, and await with interest the reaction here, if tested.
In the FX Trading Guide we have maintained a bearish stance recently, but acknowledging that downside could be restricted.

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