CHFJPY has seen a previous test at the 118 area fail. Currently, the pair has maintained a bullish bias for the last four months.
However, the bearish divergence on the momentum indicator hints to a move to the downside. A fall past the Tenkan line has shifted the focus towards the 23.6% line of the 108.60/117.91 Fibonacci retracement leg.
Should the Kijun line be unable to keep hold of prices, then the next target could then be 38.2%. This level would be in confluence with the high of the previous rally at the beginning of 2020.
We now await clues on the momentum indicator for any signs of a potential continuation to the upside. This would break the 118 mark and then head towards 118.60 which is the March 2019 high.
The short-term focus indicates that prices are trading in an ascending channel. The lower regression line is almost being tested again as we now wait for a bounce at the said level or a break downwards.
The double divergence on the momentum indicator hints to a move towards the 23.6% Fibonacci retracement line. A hold at 115.72 would indicate a false break. However, a break towards 38.2% could support further declines to the market low at 108.60.
Trading between the Tenkan and Kijun lines could see prices being driven towards the Ichimoku cloud. Should the cloud be avoided, we could then see more bias to the downside.
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