AUD/CHF traded lower yesterday, falling below the 0.6950 barrier marked by the low of Mar. 25. However, the slide was stopped near the 0.6895 level, still above the upside support line drawn from the low of Feb. 24. With that in mind, we will still treat the latest retreat as a correction and the broader short-term outlook as still positive.
A clear rebound back above 0.6950 may confirm that the bulls are willing to stay in the driver’s seat for a while more and perhaps push towards the 0.7025 barrier, marked by the high of Mar. 29. If they don’t stop there, we may see them aiming for the peak of Mar. 28, at 0.7068, the break of which could take the rate into territories last seen back in May.
The next resistance may be at 0.7100, marked by the high of May 10, the break of which could extend the advance towards the 0.7142 territory, defined by the highs of Apr. 20 and 26. Looking at our short-term oscillators, we see that the RSI rebounded from slightly above 30, but the MACD remains below both its zero and trigger lines.
Both indicators detect downside speed, by the RSI’s rebound provides hope concerning a potential rebound. However, given that this is the only positive sign from our momentum studies, we prefer to wait for a break back above 0.6950 before we get confident about a trend continuation again.
On the downside, we would like to see an apparent dip below 0.6860 before examining the case of a bearish reversal. This could confirm the break below the aforementioned upside line and may initially allow declines towards the 0.6790 zone, marked by the inside swing high of Mar. 15. Another break, below 0.6790, could extend the fall towards the low of that same day, at 0.6730.
