I’m seeing a textbook correction play on this 4-hour chart of AUD/CHF!
The forex pair already fell through its support zone at the .5750 minor psychological mark before pulling up from the lows near .5650.
Take a look at these Fib levels I’m watching to gauge if sellers are about to return soon.
AUD/CHF 4-hour Forex Chart by TradingView
Weaker than expected data from China and employment figures from Australia both weighed on AUD pairs earlier this week.
Not only did these dampen RBA rate hike expectations, but the downbeat results also hurt investors’ appetitive for riskier holdings.
As it turned out, the Land Down Under lost 65.1K jobs in December – the second-largest loss since the 1993 recession – as 41,400 part-time jobs were offset by a 106,600 loss in full-time positions.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the Austrailan dollar and Swiss franc, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Fortunately for the higher-yielding commodity currency, a bit of profit-taking from the recent risk-off flows came in play during the latest trading sessions.
This allowed AUD/CHF to pull up from its lows and approach the area of interest spanned by the Fibonacci retracement levels.
The 38.2% level, in particular, is right around the former support zone and R1 (.5720) while the 50% Fib is near R2 (.5750) and the 200 SMA dynamic inflection point.
The 100 SMA is safely below the 200 SMA to suggest that resistance levels are more likely to hold than to break, possibly sending AUD/CHF back down to the swing low near S2 (.5650) or even to fresh lows at S3 (.5620).
Just note that Stochastic is just making its way to the overbought zone to hint that buyers might need a break pretty soon. Bearish momentum might kick in when the oscillator starts turning south, so make sure you’ve got a solid risk management plan if you’re looking to trade this one!