- A slippage below 0.9545 will trigger the M-formation and eventually strengthen the Swiss franc bulls.
- The Falling Channel formation indicates that the asset is biased towards the south-side move.
- Declining 50-EMA at 0.9652 adds to the downside filters.
The USD/CHF pair is displaying back and forth moves in a narrow range of 0.9552-0.9556 in the early Tokyo session. The major has turned sideways after a perpendicular downside move, which signals a phase of inventory distribution.
The formation of a Falling Channel on a four-hour scale is advocating the Swiss franc bulls. The upper portion and lower portion of the chart pattern are plotted from June 17 high and & low at 0.9733 and 0.9628 respectively. Investors should keep May 27 low at 0.9545 on their radar as a violation of the same may trigger the formation of the M-pattern.
The 50-period Exponential Moving Average (EMA) at 0.9652 is declining strongly, which adds to the downside filters.
Meanwhile, the Relative Strength Index (RSI) (14) has shifted into a bearish range of 20.00-40.00, which indicates more downside ahead.
Should the asset drop below Friday’s low at 0.9522, the M-formation will get activated, which will strengthen the Swiss franc bulls for a downside move towards April 21 low at 0.9458, followed by April 14 low at 0.9413.
On the flip side, the Swiss franc bulls could lose their grip if the asset oversteps Wednesday’s high at 0.9690. This will drive the asset towards June 17 high at 0.9733. A breach of the June 17 high will expose the asset to more upside towards June 9 high at 0.9817.
USD/CHF four-hour chart
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