AUD/CHF traded higher yesterday, confirming the break above the downside resistance line taken from the high of March 18th. What’s more, it looks to be forming an inverted Head and Shoulders formation, which is not completed yet. With that in mind, despite the break above the upside line, we prefer to wait for the completion of the reversal pattern before we start examining a potential positive reversal.
A clear break above 0.6865 may confirm the break above the pattern’s neckline and thereby, a trend reversal. This could initially pave the way towards the 0.6973 zone, which provided resistance between May 25th and July 6th, the break of which could target the peak of May 18th, at around 0.7030. If the bulls are not willing to stop there either, we could see them targeting the high of May 10th, at 0.7100.
Shifting attention to our daily oscillators, we see that the RSI lies above its 50 line, but it has just ticked down, while the MACD remains above both its zero and trigger lines, still pointing up. Both indicators detect positive momentum, but the fact that the RSI ticked down adds credence to our view of waiting for the completion of the inverted head and shoulders.
On the downside, a dip back below 0.6660, marked by the low of September 21st, may signal the resumption of the latest downtrend and could pave the way towards the low of August 20th, near 0.6515. Another break, below 0.6515, could see scope for more declines, perhaps towards the 0.6400 territory, marked by the low of October 29th, 2020.
Disclaimer:
The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73.90% of retail investor accounts lose money when trading CFDs with the Company. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please read the full Risk Disclosure.
Copyright 2021 JFD Group Ltd.