USD/CHF Price Analysis: Bearish continuation pattern, rectangle spotted on hourly charts

A strong pickup in the USD demand assisted USD/CHF to regain traction on Monday.
The risk-off mood underpinned the safe-haven CHF and capped gains for the major.
The formation of a rectangle on hourly charts supports prospects for further losses.

Haresh Menghani FXStreet

The USD/CHF pair retreated around 15-20 pips from the daily tops and was last seen trading with modest intraday gains, around mid-0.9100s.

Worries about the spread of the highly contagious Delta variant of the coronavirus weighed on investors' sentiment. This was evident from the prevalent risk-off mood, which underpinned the safe-haven Swiss franc and capped the upside for the USD/CHF pair.

That said, expectations that the Fed could be moving closer to tighten its monetary policy sooner than anticipated acted as a tailwind for the US dollar. This, in turn, continued lending some support to the USD/CHF pair and helped limit any meaningful slide.

From a technical perspective, the intraday movement remained confined in Friday's broader trading range, forming a rectangle on hourly charts. Given the recent sharp pullback, the rectangle might be categorized as a bearish continuation pattern.

Meanwhile, technical indicators on the daily chart have been losing positive traction and add credence to the negative setup. However, RSI on the 4-hour chart remains close to the oversold territory and warrants some caution for aggressive bearish traders.

Hence, it will be prudent to wait for some strong follow-through selling below the 0.9130 region, or the daily swing lows, before positioning for any further depreciating move. The USD/CHF pair might then accelerate the slide towards the 0.9100 mark.

Any subsequent decline is likely to find decent support near the very important 200-day SMA, currently around the 0.9070 region. Failure to defend the mentioned support levels will be seen as a fresh trigger for bearish traders and prompt fresh technical selling.

On the flip side, the 0.9170-75 region might continue to act as immediate strong resistance. This is followed by the 0.9200 round-figure mark, which if cleared should allow the USD/CHF pair to retest three-month tops, around the 0.9270-75 region touched earlier this month.

USD/CHF 1-hour chart

Technical levels to watch

USD/CHF

Overview
Today last price	0.9151
Today Daily Change	0.0011
Today Daily Change %	0.12
Today daily open	0.914

Trends
Daily SMA20	0.9174
Daily SMA50	0.9076
Daily SMA100	0.9157
Daily SMA200	0.9071

Levels
Previous Daily High	0.9175
Previous Daily Low	0.9136
Previous Weekly High	0.9268
Previous Weekly Low	0.9133
Previous Monthly High	0.9262
Previous Monthly Low	0.8926
Daily Fibonacci 38.2%	0.9151
Daily Fibonacci 61.8%	0.916
Daily Pivot Point S1	0.9125
Daily Pivot Point S2	0.9111
Daily Pivot Point S3	0.9086
Daily Pivot Point R1	0.9165
Daily Pivot Point R2	0.919
Daily Pivot Point R3	0.9204

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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