USD/CHF

USD/CHF remains bounded in tight range below 1.2260 resistance so far. As discussed before, a short term low should be formed after USD/CHF's decline was contained at 1.2108 and rebounded with bullish convergence condition in 4 hours MACD and RSI. At this point, further recovery is still in favor as long as 1.2169 minor support holds and USD/CHF should edge higher to 1.2260 resistance. Break will encourage retest of short term falling trend line (now at 1.2324). However, upside should be limited by this resistance and bring another fall.
On the downside, below 1.2169 will encourage a retest of 1.2108 low but firm break below is needed to confirm recent decline has resumed for 78.6% retracement of 1.1878 to 1.2571 at 1.2211. Otherwise, consolidation may extend further with risk of another recovery before completion.
In the bigger picture, previous break of 1.2374 support should have completed a head and shoulder top formation (with ls: 1.2547, h: 1.2571, rs: 1.2550) and should be an important indication of reversal. Firm break of 1.2268 resistance turned support confirmed that the whole rally from 1.1878 has completed after failing to break through mentioned medium term falling trend line (1.3283 to 1.2760). Also, weekly MACD will still be kept negative with daily MACD staying below signal line. This favors the case that whole down trend from 1.3283 is still in force. In such case, deeper decline should be seen towards 78.6% retracement of 1.1878 to 1.2571 at 1.2211 and then 1.1878 (06 low).
On the upside, even though some lengthier consolidation should follow in case of a rebound to above 1.2260 resistance, sustained break above short term falling trend line (now at 1.2324) is needed to indicate whole fall from 1.2571 has completed. In such case, medium term outlook will turn mixed and USD/CHF could turn into prolonged sideway consolidation in a wider range between 1.21 and 1.25 levels before giving a clear signal on the next move. Otherwise, further fall is still in favor after the consolidation.

EUR/USD
RSI DIVERGENCE...



EUR/USD's recovery from 1.3070 was limited at 1.3130 and weakens mildly again. But still, as long as EUR/USD stays above 1.3070 low, further consolidation is still in favor with risk of another recovery towards 1.3142 cluster resistance (38.2% retracement of 1.3258 to 1.3070 at 1.3142). But a firm break above is needed to indicate correction from 1.3258 has completed and bring stronger rebound towards 1.3210 resistance. Otherwise, short term outlook remains neutral.
Also, note that with bearish divergence condition in 4 hours MACD and RSI, a short term top has likely be in place 1.3258 already, after rebound from 1.2865 was limited by 78.6% retracement of 1.3364 to 1.2865 at 1.3257. Focus remains on 1.3078 cluster support (50% retracement of 1.2911 to 1.3258 at 1.3085). Sustained break of 1.3078 will be the first warning that whole rebound from 1.2865 has already completed at 1.3258 and put focus back to 1.2939 support. Meanwhile, strong rebound from 1.3078 cluster support will indicate that the currently fall from 1.3258 could merely be part of sideway consolidation to rise from 1.2939.
In the bigger picture, the corrective fall from 1.3364 has completed with three waves down to 1.2865. With EUR/USD staying within medium term rising channel (lower channel line at 1.2844 now), medium term up trend from 1.1639 is still in progress. Current rally is being treated as resumption of this up trend. Break of 1.3296 resistance will add more credence to this view and should push EUR/USD to a new high above 1.3364.
However, a drop below 1.2939 will dampen this view and indicate rebound from 1.2865 is indeed a correction to the fall from 1.3364 only. That is, such correction from 1.3364 is still in progress and in such case, the rising channel line will be in focus again.