Daily Technical Update
February 17, 2010
USD/CHF Where’s the Reversal ?



* 4H: There was a reversal signal last session, but the market was supported near 1.0650, and was not able to break the previous powerline at 1.060 area. So technically, the uptrend is intact. (Refer to Daily Technical Update 2.16.2010 USD/CHF).
* However, the slow stochastic-50 is showing that the bullish mode is in for a major correction. so far it has only been a flat correction. The key is to monitor the current rally and the associated momentum. If the stochastic crosses under before reaching 60 for example, we may have an expanded flat, where the decline can be a 3-wave decline towards 1.05.
* BUT, the bullish continuation is also possible, and would be confirmed if price action creates new high, and stochastic re-enters bullish momentum mode, above 50.
* Daily: The daily stochastic here, using a 25 period shows new bullish momentum after a period of bearish momentum. There is a bearish divergence as well.
* The market is currently struggling to break above 100% projection of previous swing.
* If the market goes with the second scenario mentioned above, look for topping action around 1.09, as expansion resistance and downsloping trendline coincide with previous consolidation area (left of daily chart).
* Weekly: So we have established short-term bearish outlook, intermediate term bullish outlook. BUT the long-term outlook remains subdued and bearish. If the market is strong enough to bring the stochastic above 50, it has a chance to test the 1.15 area (78.6%), and a break eyes 1.20. This would STILL be within a bearish context in the long-term.




Fan Yang
Currency Analyst
Commodity Trading Advisor

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