Sun, June 16, 2024

USD/CHF Breaches Channel: Low at 0.8988, High at 0.9117

Dollar and Swiss franc - USD/CHF

Quick Look:

  • USD/CHF fell below its ascending channel, raising concerns about the uptrend’s sustainability.
  • The pair dropped to 0.8988 on May 16 but rebounded to 0.9117, reflecting high volatility.
  • A break below 0.8988 could target 0.8878, while recovery above the channel suggests a potential for 0.9225.

The USD/CHF currency pair has demonstrated a consistent bullish bias throughout the year, moving steadily within an ascending channel. However, this upward momentum encountered a significant challenge on May 14. At the time,  the price broke below the channel’s base. This event raised questions about the sustainability of the uptrend, placing the pair at a crucial juncture. The weakness may confirm a reversal.

Conversely, renewed strength could reinstate the pair within the ascending channel. Now, the uptrend remains theoretically intact. However, the pair’s vulnerability to a potential reversal underscores the criticality of its current position. The prevailing market adage, “The trend is your friend,” suggests that the uptrend could continue if the pair recovers and maintains its upward trajectory.

Key Events: Swiss Franc Drops to 0.8988, Rebounds to 0.9117

The USD/CHF pair breached the lower boundary of its ascending channel, casting doubts on the longevity of the uptrend. This pivotal break was followed by further weakness, with the pair plummeting to a low of 0.8988 on May 16 before rebounding to a high of 0.9117. These movements highlight the volatility and uncertainty currently surrounding the pair’s direction.

Technical Outlook: Critical Levels at 0.8988 and 0.9225

The technical outlook suggests a break below the 0.8988 low would confirm a short-term trend reversal, setting an initial downside target at 0.8878. This significant target aligns with the 100- and 200-day Simple Moving Averages (SMA) convergence. Conversely, a recovery that sees the pair break inside the channel would reaffirm the bullish uptrend. Such a move would likely require a decisive closing above the channel’s lower boundary, ideally signalled by a prominent long green candle or a series of three consecutive green candles. Furthermore, if this recovery materialises, the uptrend could remain intact, propelling the pair towards the year’s high of 0.9225.

USD/CHF Intraday Bias: Potential Rally to 0.9223

The intraday bias for USD/CHF is mildly tilted towards the upside. The corrective decline from 0.9223 appears to have completed its three-wave pattern to 0.8987, suggesting a potential rally that could retest the 0.9223 level. However, a drop below the minor support at 0.9063 would neutralise this outlook. A further break below 0.8987 would resume the downward movement from 0.9223, targeting the 38.2% retracement level of the rise from 0.8332 to 0.9223, situated at 0.8883.

Medium-Term Focus: Key Levels at 0.8883 and 0.9243

In the medium term, price actions from the 0.8332 bottom are tentatively developing into a corrective pattern against the downtrend from the 2022 high of 1.0146. A rejection at the 0.9243 resistance level, followed by a sustained break of the 38.2% retracement level at 0.8883, would strengthen the medium-term bearish outlook. Conversely, a decisive break above 0.9243 would argue for a reversal of the medium-term trend, turning the outlook bullish towards the 2022 high of 1.0146.

Forecast: USD/CHF Stable at 0.9100, Targets 0.9224

As of today, the price of USD/CHF remains stable around the 0.9100 mark, indicating stability above this level. The forecast suggests a bullish trend for the upcoming period, supported by the EMA50. The anticipated target is 0.9224, with a potential downside move pushing the price to test important support at 0.9014 before any new attempt to rise. The expected trading range for the day is between support at 0.9060 and resistance at 0.9190. Overall, the trend forecast remains bullish.

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