CHF/JPY Technical: Continuation of potential bullish impulsive up move

  • The 4-week of decline from late August 2023 has reached a key inflection point where the CHF/JPY may kickstart another bullish impulsive up move within its major uptrend.
  • Price actions of CHF/JPY have cleared above its prior downward sloping 20-day moving average last Friday, 6 October.
  • Watch the key short-term support at 163.60.

This is a follow-up analysis of our prior report, “CHF/JPY Technical: Bullish exhaustion sighted below the key resistance of 166.60 published on 12 September 2023. Click here for a recap.

The CHF/JPY cross-pair has indeed tumbled as expected and hit the 162.10 support as highlighted in our report. It has declined by -515 pips from its 15 September 2023 minor swing high to 3 October 2023 intraday low of 160.01 reinforced by the unconfirmed Bank of Japan (BoJ) intervention to buy up JPY under the instructions of Japan’s Ministry of Finance.

In the past week, the CHF/JPY has staged a significant upside reversal of +425 pips from the 3 October 2023 low to today’s 10 Oct Asian session intraday high of 164.28 at this time of the writing which recouped almost 80% of its prior losses. This remarkable turnaround has also been attributed to the rising geopolitical risk premium where the CHF benefited as a “traditional” safe haven currency triggered by last weekend’s surprise large-scale attack on Israel that may have long-lasting negative ramifications in the Middle East region.

Major uptrend phase remains intact

Fig 1:  CHF/JPY major & medium-term trends as of 10 Oct 2023 (Source: TradingView, click to enlarge chart)

Despite the -657 pips/-3.95% decline seen in the CHF/JPY from its 22 Aug 2023 high of 166.60 to the recent 3 October 2023 low, the major uptrend phase from 13 January 2023 swing low remains intact.

Several positive elements have emerged in recent days that indicate, the current upside movement in the CHF/JPY is likely the start of a new impulsive up move sequence within its major uptrend phase.

Firstly, the CHF/JPY shaped a weekly “Hammer” bullish reversal candlestick for the week ended 6 October 2023 after a test on the median line of the major ascending channel that acted as support at 160.50. Secondly, the daily RSI indicator, a gauge of momentum has managed to reverse up from a parallel support at the 34 level which is close to the oversold region. These observations indicate a revival of medium-term upside momentum.

Reintegrated above 20-day moving average

Fig 2:  CHF/JPY minor short-term trend as of 10 Oct 2023 (Source: TradingView, click to enlarge chart)

As seen on the shorter-term 1-hour chart, the price actions of the CHF/JPY from the 3 October 2023 low of 160.01 has oscillated in a series of “higher highs and higher lows”, cleared above the 20-day moving average and yesterday’s retracement in price actions have managed to stall right at the 20-day moving now acting as a support at around 163.60.

Watch the 163.60 key short-term pivotal support to maintain the current short-term bullish tone and clearance above 164.30 near-term resistance (also the 50-day moving average) increases the odds of a further potential push up to test the next intermediate resistance at 165.20/165.60 in the first step.

On the flip side, a break below 163.60 negates the bullish tone to expose the next intermediate supports of 162.70 and 162.10.

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Kelvin Wong

Kelvin Wong

Senior Market Analyst, Asia Pacific at OANDA
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities. Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets. In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.