USDCHF below .8931 would complete a medium-term top

Our immediate focus for CHF strength is against the USD, with USDCHF now also crucially poised at its critical support at .9021/.8931 – the lows of 2012 and 2013, and the “neckline” to a potentially large medium-term top.

Below .8931 would suggest an important bearish reversal has been completed, with a break targeting potential channel support at .8915/10 initially, ahead of .8862 – the 38.2% retracement of the entire 2011/2012 bull trend. While we would expect .8862 to hold at first for a recovery, a break would be looked for in due course to target .8568/18 – the 50% retracement and October 2011 low.

While .8931 holds a major top can be avoided, but with a break above .9140/47 needed to ease the immediate bearish tone, for a recovery back to .9250.

For EURCHF, the break of good support from its rising 200-day average in late September has seen the cross test and essentially hold for now the 1.2218 low of June. However, the risk is seen lower here also and our bias is for a break below 1.2218/13 in due course to target what we look to be better support at 1.2141/1.2120, where we would look for a fresh floor. If this were to prove correct, and USDCHF was to extend its sell-off to .8568/18, this would suggest EURUSD can probably move closer to 1.4000.

Read the full report: USDCHF

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