In a deceptively low range week that imbued traders with the feeling that the dollar was collapsing, but currently reflects a net 50pt loss for the greenback down 0.8 at current levels of 1.2080 market participants are reviewing the week's performance against the all important weekly close. On the weekly study there is a support line that goes back to the Dec 2004 1.1290 low, across the Dec 2006 1.1885 low, which comes in at 1.1995 today, with the 1.2004 week's low having just kissed it for all intents and purposes.
Furthermore the average downturn in the stochastics for the past two years has ended after roughly two months, and extended that by a week this week, with nascent signs that RSI could be diverging, i.e. USD/CHF is not as weak at 1.2080 as it was when it closed the week at similar levels in early March, 42.2 vs 40.8. Given the dollar's reluctance to hold at lower levels, momentum accounts are eyeing these indicators carefully. Nobody is calling a turn yet, however given the bounce off key support why not take a few chips off the table, particularly as EUR/CHF at 1.6435 could be heading for its highest weekly close since August 1998 (composite).
USD/CHF does not look like it has the energy to scale earlier highs (1.2090) nor above last week's close (1.2150) so the bears remain in control, and further downside to be expected next week, as strongly trending markets normally close the week, and open the week in the direction of the trend. Today USD/CHF has eked out a rare gain, its first of the week - sign of change?
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