AUD/CHF traded lower today, after it hit resistance at the crossroads of the 0.6824 level and the downtrend line drawn from the high of March 18th. With that in mind, we will treat the recovery from August 20th until today as a corrective move and keep a negative broader stance on this exchange rate.
A clear and decisive dip below the 0.6715 level, marked by the low of July 20th, could confirm the prevailing downtrend’s resumption and may initially pave the way towards the lows of July 30th and August 2nd, at around 0.6640. If the bears are not willing to stop there, then we may see them pushing the battle towards the low of August 20th, at 0.6515. Another break, below that low, will confirm a forthcoming lower low on the daily chart, and could see scope for extensions towards the low of October 29th, at 0.6400.
Shifting attention to our oscillators, we see that the RSI turned down after hitting its 70 line, while the MACD, although above both its zero and trigger lines, shows signs of topping. Both indicators suggest that the upside momentum is decelerating, and add some credence to our view that the latest recovery was just a corrective phase of the prevailing downtrend.
On the upside, we would like to see a break above 0.6865 before we start examining a bullish trend reversal. This could confirm the break above the aforementioned downtrend line and may initially pave the way towards the 0.6973 barrier, which provided resistance between May 25th and July 6th. If the bulls do not stop there, then we could see advances towards the high of May 18th, at 0.7030, where another break could open the path towards the high of May 10th, at 0.7100.
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