AUDCHF hit a two-month low of 0.7209 and rushed up almost immediately on May 7. After the rise, the pair tested a high of 0.7478 and yet again a sharp move followed, but downwards at this time.
The price broke above the ascending channel and AUDCHF rapidly reached the upside target. The target is expressed in 100% Fibonacci level plotted using a breakout point of the channel. Such a clean bounce confirms that the high of 0.7478 is a valid technical resistance according to this analysis. At the same time, the pair rejected the 50% Fibonacci retracement level applied to a high of 14.05 and low of 18.05.
There is the significant support around 0.7340. However, it is likely to be tested once gain and if it gets broken, the price will move further down towards a low of 07.05 forming a double bottom around the area of 0.72. Look for a sell trade near R1 with a tight stop loss and targeting either S1 (0.7340) or S2 (0.7209). Only a break above R1 could send the price higher to form a double top near R2.
The material has been provided by InstaForex Company – www.instaforex.com