Hello traders! Since July 22 NZD/CHF has been consistently trending down within the descending channel. But on August 14 price has reached 0.5940, which is 361.8% Fibonacci retracement level applied to the corrective wave up where 50 Simple Moving Average was rejected. There was a clean bounce off the Fib support and later on price has attempted to break and close below. However, in the daily timeframe, the support is still being respected, which means that price could be getting ready to reverse.
Another important factor is the formation of the bullish divergence on the RSI. While today NZD/CHF produced a new lower low, the RSI is producing a higher low, yet again suggesting a trend reversal. Right now it will be important that the daily close will remain above the 0.5917 low produced on August 18, when the bottom of the channel was rejected. If this will be the case, the price will most likely start reversing to the upside.
There is one strong resistance, which could be tested in the coming days or perhaps weeks. It is located at 0.6883 and is confirmed by two Fibs, 50% and 127.2% retracement levels. Also in corresponds to the extended 200 period Simple Moving Average and could be an extremely strong resistance area for NZD/CHF if reached.
On the downside, daily break and close below 0.5917 will invalidate bullish forecast and price might continue to move lower, towards the bottom of the descending channel.
Bias: Strongly bearish with the potential formation of the bottom
Potential Support Zone: 0.5900 – 0.5920
Potential Targets: 0.6083
Have a profitable trading!