The safe-haven Swiss franc witnessed increased demand Thursday amid risk aversion, as global equity markets plummeted. Additionally, the US dollar index failed to maintain Wednesday’s recovery, running through 97.00 to lows at 96.65.
USD/CHF, based on the H4, burrowed through 0.95 and accelerated to the downside, hauling the relative strength index (RSI) to waters deep within oversold territory, currently trading around 22.50. After daily price swallowed support at 0.9542, support on the weekly timeframe at 0.9441 elbowed its way into the spotlight on the H4, daily and weekly timeframes.
Also of interest on the weekly timeframe is a long-term AB=CD correction (blue arrows) completing at the said weekly support level, bolstered by neighbouring support by way of a 78.6% Fibonacci retracement at 0.9410. A break through the aforementioned weekly support on the H4 scale has 0.94 in sight, located just south of a 161.8% Fibonacci extension point at 0.9405.
The combination of weekly support at 0.9441, the weekly AB=CD bullish correction and nearby 78.6% Fibonacci retracement support on the weekly timeframe at 0.9410, may be sufficient to prompt a bout of short covering and maybe enough to entice fresh buyers into this market. However, traders may want to pencil in the possibility of a move to 0.94 on the H4 timeframe, before serious buyers step in, sited just south of 78.6% support on the weekly chart.
Disclaimer: The information contained in this material is intended for general advice only.