CAD/CHF recently busted through its descending trend channel, and it looks like Loonie bulls could use a retest to gather more energy for a reversal.
Or are sellers about to take over again?
Check out these inflection points on the 4-hour time frame.
CAD/CHF: 4-hour
CAD/CHF 4-hour Forex Chart Faster with TradingView
Another surge in crude oil prices, driven by the lack of progress in US-Iran diplomatic efforts, appears to be pushing the commodity-related Loonie higher.
At the same time, some risk-on flows stemming from cautious optimism for peace talks now that the ceasefire has been extended also weighed on the safe-haven franc.
Can CAD/CHF sustain momentum on its bullish breakout?
The pair recently climbed its way out of a descending channel but appears to be stalling on its ascent as it tests R1 (.5740).Remember that directional bias and volatility in CAD/CHF are often driven by geopolitical headlines and fundamentals. If you haven’t done your homework on the Canadian dollar and the Swiss franc, it’s time to check the economic calendar and stay updated on daily fundamental news.
The Fibonacci retracement tool drawn on the latest rally shows that the 38.2% level lines up with a former short-term resistance zone around the .5720 level, while the 50% Fib is closer to the broken channel top.
The 61.8% level is around the pivot point (.5700) and a major psychological mark that could be the line in the sand for a bullish correction.
Keep your eyes peeled for reversal candlesticks at any of these levels, as a bounce could lift CAD/CHF back up to the swing high or to the next upside targets at R2 (.5760), then R3 (.5800).
On the other hand, long red candles falling through the area of interest could suggest that a fresh downtrend is taking shape, possibly dragging the pair to S1 (.5670), then the channel bottom next.
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CAD/CHF appears to be in correction mode, with nearby Fibonacci levels possibly keeping losses in check. But as any trader learns the hard way, even the best-looking setup can fall apart without the discipline to stick to the plan.
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