USD/CHF technical analysis – Decline tries to take the upper hand

USDCHF’s downward correction off the 9-month high of 0.9472 has taken a breather within the Ichimoku cloud, although bearish risks continue to sponsor the downside. That said, guarding the rally off the 71½-month bottom of 0.8757 are the improving 50- and 100-day simple moving averages (SMAs), which have yet to lose their positive charge.

The Ichimoku lines are reflecting a temporary pause in negative momentum, while the short-term oscillators are suggesting that the picture remains skewed to the downside. The MACD is weakening below its red trigger line in the negative region and the RSI appears to be preparing for a dive towards the oversold territory. Looking at the stochastic oscillator, the %K line is struggling to sustain a compelling bullish tone, indicating a lack of altering positive sentiment for now.

If sellers retain price control, preliminary downside constraints may come from the cloud’s lower surface around 0.9114, which happens to be the 50.0% Fibonacci retracement of the up leg from 0.8757 until 0.9472. Lingering beneath is a support zone, existing between the converging 200- and 100-day SMAs from 0.9089 to 0.9059, respectively. Failing to provide adequate footing, the 61.8% Fibo of 0.9030 could attempt to assist; however, if the price dives from here, the 76.4% Fibo of 0.8924 may become the bear’s next target.

To the upside, the nearby vital resistance section from the 38.2% Fibo of 0.9198 until the 0.9245 high, may try to prevent price gains from evolving. Successfully conquering this reinforced border, the pair may then shoot for the 23.6% Fibo of 0.9302, before confidence in the climb encourages buyers to aim for the 0.9369 and 0.9400 boundaries.

Concluding, USDCHF is neutral-to-bearish in the medium-term. Short-term momentum is currently frozen and a break either above 0.9245 or below the 200-day SMA could trigger the price’s next direction.