USDCHF bears hold growth
After a brief recovery from the 0.9200 floor on Wednesday, USDCHF is trying again to break above the 0.9300 level and the 20-day exponential moving average (EMA).
Hopes for a bullish breakout above 0.9355 were raised when the pair avoided a fall towards the lower boundary of the short-term bearish channel earlier in the week. Since mid-December, the RSI and MACD have been trending positively and against the direction of the market, displaying a bullish divergence setup; therefore, these indicators are also sending some positive signals. Usually, this is taken as a sign that buyers are taking control.
However, with the rigid constraining line hovering above at 0.9400, buying trends may soon fade. Keep in mind that the 50-day exponential moving average and the 23.6% Fibonacci retracement of the most recent downleg are in the same area.
The price may accelerate toward the 200-day EMA and the 38.2% Fibonacci zone of 0.9540 if the bulls are successful in breaking through that barrier. Then, ahead of the 50% Fibonacci of 0.9655, the falling trendline that connects the highs from June 15 and September 7 might be on your radar.
All eyes will return to the 0.9200 base if the price closes below the 20-day EMA once more. If you don’t pivot here, you might see additional losses toward the lower boundary of the channel, which is around 0.9085. The next target could be around 0.9000, which is the support line drawn from the low on May 27.
In conclusion, despite the fact that USDCHF appears to be laying the groundwork for an upside reversal, downside risks will continue to exist as long as the pair is trading below 0.9400.