CAD/CHF is Still Extremely Bearish Since Last Year

CAD/CHF is Still Extremely Bearish Since Last Year

Published: March 3rd, 2020

4-Hour chart

CAD/CHF 4-Hour Technical Analysis 3 Mar 2020

On the 4H chart, CAD/CHF looks very bearish. Since November 2019 price has been steadily moving down and most of the time was below the 200 Exponential Moving Average. During the past 10 days price dropped significantly, where CAD lost 4.33% to CHF. CAD/CHF has traded within the descending channel all along, but what is extremely important is that on February 28, under heavy trading volume CAD/CHF broke below the 0.7252 support followed by the break below the long-term descending channel. This is a very strong sell signal for this pair.

But what happened after the breakout should also be taken into consideration. Price spiked up and rejected previous level of support, which this time acted as the resistance at 0.7252. After rejecting the resistance, yet another low was formed confirming strong bearish sentiment.

1-Hour chart

CAD/CHF 1-Hour Technical Analysis 3 Mar 2020

On the 1H chart, we can observe a very steady downside curve and it can be seen clearly, that the price is printing lower lows and lower highs without stopping. Everything is pointing out to the validity of the downtrend. You can see a clean bounce off the downtrend trendline, which is indicating the average price throughout the past couple of weeks. Most probably price will remain near this trendline, but as it stays below, sellers will not leave.

15-Minute chart

CAD/CHF 15-Minute Technical Analysis 3 Mar 2020

And finally, 15M chart, where price broke below the previous level of support and we can see a clear rejection of 200 EMA. The key point of this chart is the rejection of 61.8% Fibonacci retracement level applied to the last corrective wave up occurred on March 2. At the same time and at the same spot the downtrend trendline has been rejected cleanly. And right at the very same spot, there was a bounce off the 200 EMA. Very soon we can expect yet another impulsive wave, and most likely it will bring CAD/CHF price even lower.

Summary

There are clear indications of a strong downtrend as multiple resistances were rejected.

  1. Bounce off the downtrend trendline
  2. Bounce off the previous level of support at 0.7252
  3. Bounce off the 200 EMA on the 15M chart and price continues to produce lower lows.

All these facts are in favour of the downtrend continuation and it seems price is heading towards the Fibonacci support.

Downside targets

There is only one major downside target, which is 161.8% Fibonacci retracement level at 0.7111. Most probably, the price will reach this area sometime this week. But at the same time, the consolidation phase can take place, before and if CAD/CHF will continue to decline.

Probability of an uptrend

The probability of the uptrend remains very low, considering the heavy selling pressure on CAD/CHF throughout the past month. It is unlikely that price will reverse very fast, and usually, it would take some buying accumulation for a strong correction upwards. Although break and close above 0.7206 resistance will invalidate bearish forecast, and should, in fact, result in a trend reversal to the upside.

Support: 0.7146, 0.7111

Resistance: 0.7206

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