Technical Sentiment: Bearish
- Swiss adjusted Unemployment Rate remains at 3.2%;
- Swiss Retail Sales prints small-scale rise of 0.4%, well below the expected 2.2%;
- JPY-buying dominates Asian session and early European hours.
The bearish trend is building momentum with CHF/JPY heading for the 3rd consecutive negative day. Traders are long on Yen and will keep the course as the pair is heading to test the 200-Day Moving Average and the double bottom support at 113.
Get our Weekly Commitment of Traders Report: - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
Last week CHF/JPY rallied straight into the old support line at 115, only to see quick exhaustion and reversal. The 115 level was strengthened by the 200 Simple Moving Average on the 4H time frame, coupled with a strong Fibonacci confluence (38.2% from 116.87 High down to 113.01 Low; 50% from 117.86 High down to 113.01 Low).
The main trend remains bearish seeing as the market keeps making Lower Lows and Lower Highs. Stochastic is turning bearish on the Daily time frame after reaching overbought territory, hinting for more losses in the current bearish wave. CHF/JPY traders are now targeting the 200-Day Simple Moving Average and the double bottom support at 113. A break below 113 will consolidate the long term bearish trend, opening the way towards February 4th Low of 111.68, with potential of escalating losses as low as 109.78 on a Daily time frame.
A third rejection from the 113 support area will indicate a consolidation period, unless the rejection is a very large bullish price action pattern. The latter would point the end of the current bearish wave and a return to 115 will then be the most likely scenario.
Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets