AUD/CHF fell sharply yesterday during the European morning after the SNB unexpectedly hiked rates by 50bps. This resulted in the break below the 0.6840 zone, which had been acting as key support since Apr. 25, with some short periods of exception. In any case, the tumble met support at 0.6745, and the rate rebounded somewhat. However, the recovery remained limited below 0.6840, and another slide followed. In our view, this paints a negative short-term picture.
A clear and decisive break below 0.6745 would confirm a forthcoming lower low and may initially aim for the low of Mar. 4, at around 0.6705. A break lower could carry more bearish implications, perhaps targeting the 0.6650 hurdle, marked by the low of Mar. 2. If the bears are unwilling to stop there, we may see them pushing towards the 0.6580 zone, marked by the low of Feb. 24.
Looking at our short-term oscillators, we see that the RSI turned down again and looks ready to fall back below its trigger line, while the MACD lies below both its zero and trigger lines. Both indicators detect strong downside speed and support the notion of further declines in this exchange rate.
To abandon the bearish case and start examining a decent recovery, we would like to see a clear break above the critical support zone of 0.6840. This could wake some bulls up and allow them to challenge the 0.6892 barrier, marked by the low of Jun. 13, the break of which could aim for the high of the day after, at around 0.6940.
If that barrier cannot halt the slide either, we may experience extensions towards the round psychological figure of 0.7000, also marked near yesterday’s high.