AUD/CHF price analysis: poor NFP could drive this cross lower
AUD/CHF price analysis: With the AB=CD formation deemed as complete, this offers a solid reward and risk trade for a further move to the downside.
Market highlights from the past week
Friday, May 1: Risk appetite was more vulnerable on Friday as global trade fears persisted.
Monday, May 4: Risk conditions remained a significant element on Monday with greater caution continuing to underpin the Swiss currency on defensive grounds.
Tuesday, May 5: March retail sales data was slightly stronger than expected, but the Australian currency was unable to make further headway and settled around 0.6445.
Wednesday, May 6: The franc was little changed with no further deterioration in risk appetite and USD/CHF consolidated around 0.9750 as April unemployment increased to 3.3 per cent from 2.8 per cent previously.
Thursday, May 7: Commodity currencies were resilient and secured net gains on Thursday.
AUD/CHF price analysis
Let us have a look at the technical viewpoint.
Monthly: Traded to multiyear lows of 0.5342 in March as traders ran to buy the safe haven Swiss franc (selling 0'>AUD/CHF ). We have seen a recovery of 19.86 per cent from the base to the April 30 peak.
Weekly: All last week’s initial rally was sold into. This left an inverted hammer on the weekly chart, a negative candle for sentiment.
Daily: The move higher can be seen in five waves (Elliott wave). This would suggest that we are now in the corrective ABC move to the downside. We posted a bearish outside bar on April 30. This candle often indicates the end of a trend and the start of a new downward bias. Support is seen at 0.5950.
What is your sentiment on AUD/CHF?
Intraday four-hour: An AB=CD corrective formation looks to target 0.6364. We have made a 0.6361 overnight.
Outlook: With non-farm payroll due today, are we going to see risk off again? This pair/cross would favour a poor reading. With the AB=CD formation deemed as complete, this offers a solid reward and risk trade for a further move to the downside.
Possible trade setup
Action: Selling at the market (currently 0.6333)
Targets: 0.5950 (long-term target)
Potential return on risk to first target: R5.7 (reward 383 / risk 67)
Risk Warning - Your capital is at risk - Losses can exceed deposits
Trading spot foreign exchange and futures on margin carries a high level of risk and may not be suitable for all investors. You may lose all your capital. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in spot foreign exchange or futures you should carefully consider your investment objectives, level of experience, and risk appetite. If you are in any doubt about investment or the mechanics of such products, you should seek independent financial advice.
Ready to trade? Currency.com gives a special gift for all new clients: a $100 random bonus. Take this offer as an opportunity to test out your favourite trading strategy. Verify an account on Currency.com, close three trades and get your hands on some Bitcoin or trade 1300+ other markets.