CHFJPY has been trending lower but it looks like a reversal is in order. Price failed in its last two attempts to break below 112.35 and found resistance at 114.50, creating a double bottom pattern.
Price is also in the middle of breaking above its neckline, possibly yielding at least 200 pips in gains if the rally pushes through. However, the 100 SMA is below the 200 SMA so the downtrend might still resume later on. In addition, the gap between the moving averages is widening, suggesting a stronger bearish run.
Both stochastic and RSI are moving higher but it seems that the former is already indicating overbought conditions. This might be enough to draw more sellers to the mix, especially if RSI reaches the overbought area as well.
In that case, a selloff back to the support could take place and stronger selling pressure might even lead to a breakdown.
Data from Japan has been mixed and traders are still wary of potential BOJ intervention, which is probably why the yen is giving up ground to most of its forex peers. Meanwhile, data from Switzerland has been stronger than expected.
Swiss retail sales were up 0.2% year-over-year in January instead of falling by the estimated 1.2% figure. The manufacturing PMI rose from 50.0 to 51.6 to show a pickup in expansion instead of falling to the estimated 49.6 figure.
Funds flowing out of Europe in anticipation of a possible Brexit are leading to inflows to Switzerland, which is also positive for the franc. Prior to this, SNB head Thomas Jordan hinted that they’re not looking to lower deposit rates deeper into negative territory, adding to the franc’s appeal.
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