CAD/CHF Potential Downtrend

FX:CADCHF   Canadian Dollar/Swiss Franc
On November 11, CAD/CHF formed a triple top near 0.7040, after which the price went down and broke below the 50 Simple and Exponential Moving Average . The correction up followed, which was stopped by 50% Fibonacci retracement level, which has been rejected cleanly at 0.6987.

The most recent price action shows that CAD/CHF broke below the uptrend trendline while the Fibonacci cycle is pointing out to yet another bearish cycle. It seems like the selling pressure is gradually increasing, which might result in a strong downtrend throughout this week.

As long as the price remains below the key psychological resistance at 0.7000, CAD/CHF is expected to move towards one of the Fibonacci support levels. The final target is located at 0.6785, which corresponds to 327.2% Fibs, applied to the corrective move up after price broke below 50 EMA and SMA . These support levels also correspond to the 78.6% Fibs, as shown on the weekly chart.

Based on the Fibonacci cycles, Fibonacci support, and average-price downtrend trendline, the 0.6785 support could be tested as soon as November 28th because all these indicators are crossing with each other at this date. Therefore, if a downtrend occurs, it could be very strong and a 160 pips downside move could be accomplished in only 5 trading days.

On the other hand, daily break and close above the 0.7000 resistance will immediately invalidate the bearish forecast, and CAD/CHF should be expected to move towards the 0.7050 resistance area or above.

Key support levels: 0.6912, 0.6849, 0.6784
Key resistance levels: 0.6987, 0.7000

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Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
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