Technical Sentiment: Bearish
Key Takeaways
- Lower Highs and Lower Lows confirm bearish correction is still in play;
- USD/CHF is carefully treading the 200 Simple Moving Average on 4H;
- Below 0.9400, traders could extend losses towards 0.9250 – 0.9300.
Despite overall strong U.S. data, the greenback took an extended breather in recent weeks against a basket of currencies. USD/CHF remains dominated by selling pressure and another bearish leg is likely below 0.9400.
Technical Analysis
Last week USD/CHF formed a double swing low at 0.9467, while testing the upper resistance boundary based on its previous bullish channel, signaling a potential comeback from U.S. bulls. This recovery scenario was quickly invalidated when price formed another Lower High, failing to overcome the bearish structure set throughout October. Ensuing sell-off stopped once hitting 200 Simple Moving Average on 4H, quickly followed by a range behavior afterwards.
Resistance is currently set at 0.9467, where previous double bottom support has effectively turned into resistance this time around. While USD/CHF stays below this level, selling pressure will continue to dominate, opening downside risk towards 0.9337 (50-Day Simple Moving Average) and 0.9250 (channel support).
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Daily Stochastic has declined down to oversold territory and appears to be turning around. While this warns of a possible bottom forming soon, traders must wait for proper price action confirmation. USD/CHF must break and stabilize above 0.9470 in order to invalidate its bearish structure of Lower Highs. Only then can buyers resume the uptrend, targeting 0.9685 and possibly above.
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Prepared by Alex, Currency Strategist at Capital Trust Markets
