Technical Sentiment: Bullish
Key Takeaways
Traders had plenty of reasons to be active on Thursday. The European Central Bank reduced benchmark interest rates from 0.15% to 0.05%, deposit rates from -0.1% to -0.2% and brought the subject of an ABS purchase plan; while QE is still on the table.
Technical Analysis
The markets have been one sided all day, with Euro experiencing a major sell-off alongside GBP and CHF. Large cash flows were noted into Australian Dollar, CAD and US Dollar. Most pairs went on to break major support and resistance levels, drastically changing the technical landscape for the rest of September.
CAD/CHF has already been on a major bullish uptrend since March 2014, crossing over the 200-Day Simple Moving Average and bouncing higher off of it multiple times when tested from above. Buying pressure was confirmed since last week of August, when the pair began stabilizing above 0.8420, a major resistance marked by July swing tops. Today’s rally accelerated past another major pivot level at 0.8530, opening fresh targets towards the upside.
Free Reports:
CAD/CHF is currently trading around 0.8580, with Stochastic pointing to overbought conditions on all major timeframes. Upside targets, with their corresponding technical handle, are as follows:
0.8600 – 38.2% Fibonacci retracement from 0.9897 down to 0.7803:
0.8700/20 – old support level strengthened by 100-Week Moving Average;
0.8850 – monthly pivot line coupled with a Fibonacci confluence.
Short term retracements should be limited to 0.8528/30, where offers are expected to accumulate for the time being. The preferred strategy remains to buy dips and remain long while Higher Highs are being priced in.
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Prepared by Alex Z., Chief Currency Strategist at Capital Trust Markets
