August 27, 2021

AUD/CHF Fibonacci Resistance?

 Pandemic cases continue to rapidly rise in Australia, raising the odds of short-term weakness coming for the Aussie dollar.

That makes this simple Fibonacci setup on AUD/CHF one to watch for a potential bearish reversal ahead.

AUD/CHF Fibonacci Resistance?

As mentioned in the intro above, Australian covid-19 cases have been accelerating higher over the past month, with the 7-day average now over 900 cases per day, well over the 163 cases per day at the end of July. This record growth in cases has created the need for emergency tent hospitals in Sydney as the healthcare system is overwhelmed, and likely to bring on further restrictions / lockdowns in the near future.

With Australian economic / sentiment data already showing slowing conditions (e.g., Australia manufacturing PMI slows in August), the deteriorating covid situation is likely to spark speculation that we may see supportive actions from the Reserve Bank of Australia, and potential Aussie weakness to come.

If you’re in that camp, AUD/CHF may be one of the better pairs to check out, not only on the potential for the Aussie fall on the above mentioned argument, but also on an potential shift in global risk sentiment towards negative as the Delta variant surges, likely a positive theme for the “safe haven” Swiss franc if traders look for safety.

Also, we’ve got a set of textbook technical arguments for AUD/CHF bears forming on the four hour chart above to consider. This includes a test of the falling moving averages and Fibonacci retracement levels, an area that could draw in pure technical traders to go short or take profits from this week’s bounce. This is bearish argument is also enhanced by the stochastic indicator giving an overbought signal to potentially give technical traders a little more bearish conviction.

What do you all think? With fundamentals and technical patterns pointing to a potential bearish turn ahead, are you looking to take a short position on AUD/CHF? Or will this be short-lived situation that pushes the pair above these bearish technical arguments?