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.
Author
Tomasz Wisniewski
Axiory Global Ltd.
Tomasz was born in Warsaw, Poland on 25th October, 1985.
