After hitting the 109.00 barrier on Wednesday, CHF/JPY sold off and we saw it drifting towards the 108.15 zone, where the pair got held from moving lower, as it was the case on September 19th. Looking at the technical picture on 4-hour chart, we can see that the price structure suggests there could be a potential short-term range forming inside a descending triangle pattern. The lower bound of the possible range coincides with the lower side of the above-discussed triangle, which is at the 108.15 hurdle. Given that the pair is currently closer to the lower end, we will take a cautiously-bearish approach for now, but wait for a confirmation break first, before examining lower areas.
A drop below the 108.15 zone would confirm a forthcoming lower low and this way CHF/JPY could attract more sellers into the game. We will then examine a possible move to the 107.90 hurdle, marked near the low of September 9th. If that hurdle also surrenders to the sellers, this could clear the path to the 107.57 territory, which was seen as a good support level on August 28th.
Looking at our oscillators, both seem to be somewhat in support of a possible downside scenario. Even though the RSI is pointing up, it currently sits below 50. The MACD is below the zero line and its trigger line, and continues to point lower.
In order for us to get comfortable with higher areas, we will wait for a strong move, not only above the upper side of the triangle (which is also a short-term tentative downside line taken from the high of September 13th), but also above the upper side of the aforementioned range, at 109.00. This way, more buyers could be joining in and lifting the rate to the 109.20 obstacle, a break of which might set the stage for a further move north. This is when we will aim for the 109.58 level again, which marks the peak of September.
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