USD/CHF has traded in a sideways 1.2520-40 chop for most of the morning. Traders are bearish, given that yet again topside failed to break out, although new highs for the month were registered at 1.2565. The swathe of sovereign offers, and corporate hedgers were filled in earlier in the day, only for new sellers to emerge - the approach slopes of Mt. 1.26 are teeming with bears it seems. What is interesting however is that the USD bids have ratcheted up alongside the new highs, short sellers are now on the bid between 1.2520-25 instead of the offer.
Momentum accounts are worried, the day's low, registered in early Asian trading coincided with the 10-day M/A at 1.2480, and price action on the daily chart looks like the pair tested the level and immediately rebounded. Tuesday's 1.2375 low bounced off the 20-day M/A in similar fashion. There was also a 45 degree Gann line from the highs that had held price action up until today violated at 1.2480, giving the 10-day M/A even more power. On the weekly study a close at current levels would reclaim an uptrend line abandoned 9 weeks ago - the bottom of an uptrend channel formed by the June, July and October tops.
Today's highs were the highest since Nov 6, and momentum accounts are getting edgy - without the heavy sovereign sales USD/CHF would be a lot higher - back on the march to the October 1.2775 highs we asked the question is 1.2500 weak? The same question is relevant today.
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