USDCHF Trendline Proves Worth; Bounce Coming?

Technical Bias: Neutral

Key Takeaways

• US dollar dipped a couple of times against the Swiss franc but bounced every time from an important support area.

• 200 simple moving average (4H) continues to act as a support for the USDCHF pair.

• Risk of bounce grows in USDCHF as it failed many times to trade lower.

Recent economic releases in the US were on the positive side but failed to lift the US dollar to some extent. However, there is a chance of rebound moving ahead.

Technical Analysis

There is a monster bullish trend line formed on the 4 hour chart of the USDCHF pair, which acted as a support on a number of occasions. However, the best part is the fact that the mentioned trend line is also coinciding with the 200 simple moving average (SMA) – 4H. There is a bearish sign developing, as the pair is now trading below the 100 and 50 SMA (4H). The pair dived below the 50% Fibonacci retracement level of the last leg from the 0.9360 low to 0.9743 high recently, but quickly bounced back to close above the same. We need to see how long the pair can manage to hold the mentioned bullish trend line. A break and close below the same might ignite a sharp downside reaction in the pair. In that situation, the USDCHF pair might head towards the 0.9440-20 swing support area.

On the upside, the confluence area of 100 and 50 SMA’s is the key. If the US dollar buyers manage to take it above the 0.9620 level, then USDCHF might retest the last high of 0.9743.

Moving Ahead

There is no major release in the US today. So, we might witness mostly ranging moves in the US dollar. Overall, one might consider buying dips in the USDCHF pair as long as it is trading above the 50% fib retracement level of the last wave.