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Technical Analysis – Will the CHFJPY rally ever halt?

Technical Analysis – Will the CHFJPY rally ever halt?

CHFJPY has made a fresh all-time high at 156.57 as the latest leg of the rally that started on March 20, 2023 does not appear to have an ending. This pair quickly overcame that previous high of 151.41 and it has not looked back since.

Understandably, CHF bulls must be in dreamland and unwilling to accept that the technical picture is probably showing some very early signs of rally exhaustion. The RSI remains strongly bullish but the same cannot be said for the remaining momentum indicators.

The Average Directional Movement Index (ADX) remains stuck below its 25-threshold and thus signaling a range-trading market, despite the recent upleg. More interestingly, the stochastic oscillator appears less satisfied with the recent price action as the higher high in CHFJPY has not been met with a similar print in this indicator. This potential bearish divergence could allow the bears to stage their first comeback since the March dip.

Should the stochastic oscillator deliver the bearish message, the CHF bears would be keen for a retest of the 151.41-152.08 area. Breaking this range would be a strong short-term win for them, opening the door for an even stronger correction towards the 146.84-148.09 area that is defined by the 100- and 200-day simple moving averages (SMAs).

On the other hand, the bulls’ aim is easier despite the fact that they continue to venture into uncharted waters. The next target appears to be the 160 level, which is important from a sentiment perspective.

To sum up, CHFJPY bulls remain comfortably in control of the market with the bears pinning their hopes on a bearish signal from the stochastic oscillator.

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