Chart of the Day - 8/07/2008 - USD/CHF

James Chen
Chief Technical Analyst
FX Solutions
8/07/2008 – USD/CHF – With the recent pronounced rally in the USD/CHF (a daily chart of which is shown), price has reached significant resistance at the juncture of two different resistance factors. One of these factors is the long-term downtrend resistance line (represented on the chart by the longest red line). The second factor is the horizontal level around 1.0625 (represented by the yellow horizontal line), where price reached a swing high in early May. Because of the combined strength of these two resistance factors, any breakout above would carry considerable significance. In this event, price should target the next resistance levels to the upside around 1.0730 and then 1.0830. Oscillators like the displayed Stochastics are indicating that price is still in a prolonged overbought period and pointing sideways. In the event of an impending downward correction, price should find immediate support around the 1.0520 level, and then further down at the 1.0400 region.