CHF/SGD 1H Chart: Channel Down
The Swiss Franc is trading in a channel down against the Singapore Dollar. The given formation was created when the rate bounced off the bottom boundary of a longer-term falling wedge and continued to move in the same range even after this patter was breached. From theoretical point of view, the Franc should have appreciated after the breakout; however, given the chaotic nature of the pair’s movement in the wedge, bulls could not to prevail. The pair is currently stranded from the upside by the 55– and 100-hour SMAs and the 100% Fibonacci extension line (drawn from the July high). In short-term, the rate is expected to test the upper channel boundary, which is reinforced by the 200-hour SMA circa 1.4050. Subsequently, the pair may trade even higher, taking into account technical indicators which suggest that a further momentum north is a likely option.
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The rapid appreciation is being halted at the 61.8% Fibonacci retracement line. Technical indicators support a decline in the nearest time; possible target - the 200-hour SMA circa 1.4025.
The Swiss Franc has been trading in a short-term decline against the Singaporean Dollar for almost a month. The rate halting at the 61.8% Fibonacci expansion line late August indicated to a possible formation of a new descending channel.
However, the diminishing trading range resembles more a falling wedge. Fibonacci expansions worked effectively at stranding the pair between the 61.08% and 100% level before a breakout below the latter occurred late on Wednesday. During the aforementioned consolidation phase, the Franc failed to push through a resistance cluster formed by the 55-, 100– and 200-hour SMAs and the weekly PP in the 1.4000/1.4060 area.
Given that technical indicators are strongly bearish and therefore due for a recovery, a re-test of this area is the most likely scenario. This could set the pair for a breakout of the upper wedge line and consequently a surge until the weekly or monthly PPs at 1.4056 and 1.4141, respectively.