On October 23rd, CHF/JPY fell below the short-term upside support line drawn from the low of October 4th, and since then, it’s been printing lower highs and lower lows below a new downside tentative line drawn from the high of October 21st. Having these technical signs in mind, we will adopt a somewhat bearish stance for now.
In order to start examining further declines though, we would like to see a clear dip below 109.05, a barrier which acted as a strong resistance between September 17th and 27th. Such a move is likely to initially pave the way towards 108.80, the break of which could allow the bears to push towards the low of October 15th, at around 108.37.
Shifting attention to our short-term oscillators, we see that the RSI turned up from slightly above 30, while the MACD, although negative and fractionally below its trigger, shows signs of bottoming as well. These signs suggest that a small corrective bounce may be in the works before the next negative leg, perhaps for the rate to challenge the aforementioned new downside line.
We would start considering the bullish case only if we see a strong break above 109.60, which is Friday’s high. Such a move would also drive the pair above the new downside line and may open the path towards the 109.92 area, which is the high of Thursday. If the bulls don’t stop there, a break higher may allow them to put the 110.40 zone on their radars, which is the high of last Monday.
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