AUD/CHF traded higher on Wednesday after it hit support near the 0.6570 barrier, which is the lower bound of the sideways range that’s been containing the price action since Dec. 21. In our view, the rebound suggests that traders are willing to stay within that range for a while more, and thus, we will maintain a flat stance for now.
To start examining whether the bears have gained the upper hand, we would like to see an apparent dip below the 0.6570 zone. This will confirm a forthcoming lower low and could confirm the downside exit out of the range.
We could then see declines towards the low of Dec. 20, at 0.6535, the break of which could allow extensions towards the 0.6497 level. If the bears are not willing to stop there either, we could see them overcome that barrier and dive down to the 0.6420 zone, near the low of Dec. 3.
Taking a look at our short-term oscillators, we see that the RSI Just ticked above its 50 line, while the MACD, although negative, lies above its trigger line and points up as well. Both indicators suggest that some further recovery may be on the cards, within the aforementioned range, and add credence to our view of waiting for the exit.
Now, we will consider the outlook to have turned bullish if we see a break above the range’s upper bound, at 0.6674. This could signal the upside exit out of range and initially target the 0.6708 barrier first, which provided support between Nov. 19 and 25. If the bulls are unwilling to stop there, a break higher could extend the advance towards the peak of Nov. 24, at 0.6760.