FX.co ★ The USD/CHF technical analysis and trading recommendations for October 7, 2010

4-hour timeframe

Overview:
Sell signal with the target to 0.9781 is continuing. The Bollinger Bands started to diverge, thus denoting the renewal of the downtrend. In this case, the current target of the downside movement is the third support level of 0.9508. In whole, the signal is strong and confirmed, as the price is below the Ishimoku cloud and the Chinkou Span is below the price chart. The downside movement is more preferable now. In case the price rebounds from this level, the side way trend or correction may happen. If the price breaks through this support level, we will have next target for movement - 0.9371. In case the price is above the Kijun-Sen (0.9680), sell signal will weaken and it is recommended to cut short positions. The Chinkou Span is below the price curve, thus confirming the bearish sentiment. The Bollinger Bands show the downward movement, the lines are diverging and directed downside. The MACD is ascending thus indicating the downtrend.

Trading recommendations:
Currently, it is recommended to trade short with the target to 0.9508. Stop-loss is set above 0.9680.

In addition to technical image one should take into account the fundamental data and the time of their release.

The chart annotation:
Ishimoku indicator:
Tenkan-sen — red line
Kijun-Sen — blue line
Senkou Span A — light brown stipple line
Senkou Span B — light purple stipple line
Chinkou Span — green line
Bollinger Bands indicator:
3 yellow lines
MACD indicator: