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NZD/CHF, CHF/JPY Primed for Action?

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Swiss Franc Technical Outlook – Talking Points

  • NZD/CHF weakness may accelerate on possible Death Cross Formation
  • CHF/JPY may see a near-term breakout from a Falling Wedge pattern

NZD/CHF Technical Outlook

The Swiss Franc has strengthened against the New Zealand Dollar this week, with NZD/CHF tracking near a 0.75% loss through Thursday. Since reaching a multi-year high in February at 0.6766, prices have sunk over 5%. The move lower formed a downward channel as prices pivoted between resistance and support, forming lower highs and lower lows.

The bearish outlook was bolstered this week, with a drop below the 200-day Simple Moving Average (SMA). Moreover, the shorter-term 50-day SMA may soon cross below the 200-day, which will form a Death Cross. If that crossover occurs, it will likely fuel the pair’s downside momentum to the Swiss Franc’s benefit.

NZD/CHF Daily Chart


Chart created with TradingView

CHF/JPY Technical Outlook

Despite sharp losses from June, the Swiss Franc’s technical stance against the Japanese Yen has brightened this month. CHF/JPY is nearly unchanged since July kicked off. A phase of consolidation in recent weeks has seen a Falling Wedge pattern take shape. This may result in a breakout as the pattern is inherently bullish.

Moreover, a bullish divergence in the Relative Strength Index (RSI) reinforces the bullish outlook, with higher lows in the oscillator coinciding with lower lows in price. That indicates downside momentum is waning. A breakout, if it occurs, will likely target the June high (122.77). While the 26-day Exponential Moving Average (EMA) appears to be the most immediate resistance level, the path of the least resistance appears to be to the upside.

CHF/JPY 8-Hour Chart

chfjpy, bullish rsi divergence

Chart created with TradingView


— Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwateron Twitter

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