USD.CHF Targets Parity Despite Bullish Divergence
- 4H: The USD/CHF shows a bullish divergence with the RSI, and the market has since rallied from 1.0060 to 1.0160.
- The market then tested the 50-period simple moving average and failed to break so far.
- The bearish candle that followed was strong.
- There is a negative reversal developing. (after dipping below 30, the RSI peaks higher with lower corresponding price peak).
- There is a bullish divergence though, but note the orientation of the moving averages. The market is bearish and the 50 vs 200 MA gap is widening. In this mode, divergences are not as reliable as when the market is ranging. Instead, they sometimes (as in this case) lead to negative reversals suggesting at least one more swing.
- In this case, the swing targets 1.0, parity level. If a 4H candle closes above 1.0170, this swing projection is invalid.
