Is The Franc Ready To Pull Back Again?

The Swissy has been rallying strongly recently but the pair could be running out of momentum as it edges closer to the 0.9966 resistance level. Furthermore, a combination of stochastics, chart patterns, and fundamentals are hinting that a reversal is on the cards. Consequently, Swissy Bulls might be in for a shock in the near future.

Firstly, the most damning evidence which is suggesting the USDCHF is about to make a move a lower is a Gartley Pattern. Specifically, a relatively robust bearish bat pattern has formed and ishinting at future downside potential for the pair. Additionally, the USDCHF is nearing the 0.9966 price level which has proven difficult to break.

In addition to the bat pattern, looking at the H4 chart reveals that an ABC formation is nearing completion. What’s more, this ABC pattern constitutes the final leg of the Bat which will be adding to any speculation surrounding the pair. However, it is worth keeping in mind that the ABC could in reality be an incomplete 3 drive or Elliot wave pattern. If this is the case, the Swissy could be set to climb at least once more before subsequently crashing.

Whilst the formation of a bearish bat and ABC pattern are convincing, stochastic oscillator readings give further reason to suspect an imminent fall for the USDCHF. Importantly, the oversold reading is present on not only the daily but also the H4 and H1 charts. As a result, selling pressure will be mounting later in Friday’s session, especially as London and New York come online.

On the fundamental front, a contraction in the Philadelphia Federal Manufacturing Index and softer than expected US Unemployment Claims figures could limit or even reverse the recent bullishness of the pair. Considering the result was forecasted at a 3.3 increase, the 1.8 contraction in the manufacturing index is likely to make its presence felt as the trading week comes to an end. Likewise, the underwhelming 278K US Unemployment Claims figures could significantly limit the pairs upwards mobility during the remainder of the session.

Ultimately, the current resurgence of the Greenback is likely to be relatively short lived. Moreover, the recent FOMC minutes can be attributed tocausingthe relative bullishness of the USD. As a result, the Swissy will likely correct to the downside in the near future. There is a chance that the pair has another rally in the interim but in the end, the underlying weakness of the US economy should drive the pair back to support.