Forex Trading: USD/CHF Consolidating After Drop

Price action on USD/CHF, as shown on the displayed daily chart, has entered into a tight consolidation after the substantial drop that occurred last Friday. The drop broke down below a key support level around 1.1100. For the first half of the current week, the pair has been consolidating just below that level, unable thus far either to correct back above 1.1100 or to continue its bearishness down to the next major support level to the downside around 1.0850.

Any downside break of the current consolidation should target this 1.0850 region, which is also currently in the general region of a key uptrend support line extending from an important low back in March of 2008.

Conversely, any bullish correction on the current downmove that breaks back above the 1.1100 level should find strong resistance around the 1.1250 region.

(Chart courtesy of FX Solutions’ FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)

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