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Greg Michalowski

Forex Trading: USDCHF Keeps Bearish Bias

By Greg Michalowski on | More Posts By | Forex News By FXDD

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The USDCHF  fell below trendline support as the flight to safety continues in the pair and the bearish bias has remained with selling pressure showing up against the underside of the bottom channel line (see chart above).

Often on a break of a channel trendline, the market will have corrective moves back to the channel at some point. If the underside of the trendline level holds, it is a signal for a continuation of the trend (in this case back to the downside).  A move back within the channel on the other hand, often signals the break might not be sustainable.  In other words, the channel line become support again.

With regard to the USDCHF, the break of the channel trendline, led to a sharp move to the 0.9200 level.  The corrective move back higher came right back up to the trendline at 0.9239. The high reached was 0.9241 and sellers took back control almost immediately.  

Needless to say, until the price can move back above the trendline and into the channel again, the bias will remain with the trend – i.e., to the downside.  A move through the low at the psychological 0.9200 level would of course be needed to solicit additional selling pressure.  If the price gets through 0.9200, the next key level to eye comes from  the daily chart. That level comes in at the 0.9177 level where a trendline connecting the lows from October and December 2010 come in. I would expect profit taking buyers to use the level to lighten up on their trend positions, with a break likely leading to further stop selling.

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