Seven red days for USD/CHF: A prelude to more decline?
|In today's deep dive, let's shift our attention to the American Dollar to Swiss Franc (USDCHF) pairing, currently in anticipatory limbo as it awaits key inflation data from the U.S. A swift glance at the chart unveils a distinctly bearish aura, underscored by a relentless string of seven consecutive bearish candles. Such a sequence hasn't graced the charts in a significant amount of time, underscoring the magnitude of this bearish momentum.
Zooming out, this bearish procession is part of a larger technical narrative – the double top formation, highlighted in yellow. This formation, renowned in technical analysis circles as a bearish reversal pattern, has its neckline firmly positioned at 0.91 (green). This level stands tall as a pivotal horizontal support for USDCHF. The decisive breach below this mark amplifies the bearish sentiment, and it's not surprising that this rupture ignited a more pronounced downward thrust.
However, all hope isn't lost for the bulls. Nestled within this bearish tableau is a glimmer of hope – the black uptrend line. This line, charting the trajectory of higher lows since late July, emerges as a last bastion of support for the pair.
So, where does this leave traders? With inflation numbers in the offing, heightened volatility is almost a given. A scenario where the price rebounds off the black line, forging a hammer candlestick pattern and embarking on an upward journey, signals a buying opportunity. Conversely, should the pair capitulate below this line, sealing the day's trade beneath it, that's a clarion call for a short position.
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