Featured Trade: CHF/JPY on a potential slow descend to retest flash crash low

Downtrend remains intact for CHF/JPY

Short-term technical outlook on CHF/JPY (Fri 01 Feb)



Click to enlarge charts

Key elements

  • The recent rebound from its 03 Jan 2019 “flash crash” low of 105.92 has stalled right below the 111.30 pull-back resistance of the former ascending trendline support from Jun 2016 low (post Brexit referendum) on 09 Jun 2019.
  • Thereafter, it has continued to embark on a slow descend below a minor descending trendline from 11 Dec 2018 high of 114.54 now acting as a resistance at 110.00 (see 1-hour chart).
  • Yesterday’s price action has a failure breakout above the former minor range support of 109.60 (16/23 Jan2018 minor swing low areas) and traded back below it (see 1-hour chart).
  • The next significant near-term supports rest at 108.65 and 107.90 (Fibonacci retracement/expansion cluster & 03 Jan 2019 swing low area).
  • The 1-hour Stochastic oscillator has continued to inch downwards and still has further room to manoeuvre to the downside before it reaches an extreme overbought (depicted by the pink box on the 1-hour chart). These observations suggest that short-term downside momentum of price action remains intact.

Key Levels (1 to 3 days)

Intermediate resistance: 109.60

Pivot (key resistance): 110.00

Supports: 108.65 & 107.90

Next resistance: 111.30/55

Conclusion

The minor downtrend in place since 11 Dec 2018 high remains into for the CHF/JPY cross pair. If the 111.000 key short-term pivotal resistance is not surpassed, the pair may stage a further decline to target 108.65 follow by the recent 03 Jan 2019 “flash crash” swing low area of 107.90

On the other hand, a break above 110.00 negates the bearish tone for another round of corrective rebound to retest the 111.30/55 key medium-term resistance (the former ascending trendline support from Jun 2016 low).

Charts are from eSignal



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