USD/CHF Price Analysis: Positive divergence at a 4-hour chart could cap a move towards 0.9000

The USD/CHF slides to fresh three-month lows, down 0.70%, trading at 0.9095 during the New York session at the time of writing. Mild risk-off market sentiment has kept the USD weaker across the board, except for risk-sensitive currencies, like the AUD and the GBP.

The US Dollar Index, which tracks the performance against a basket of six peers, declines 0.25%, down to 93.89, while the US 10-year Treasury yield remains flat at 1.558%. Furthermore, investors seem convinced that the Fed would hike rates by the beginning of the second half of 2022, 

USD/CHF Price Forecast: Technical outlook

Daily chart

The USD/CHF is trading below the trend-setter 200-day moving average (DMA) which lies at 0.9147. Furthermore, the downward trend accelerated, pushing the pair towards the bottom trendline of a bullish flag channel, which would invalidate the pattern in case of being broken.

In the outcome of a downside break, the next support would be the August 4 low at 0.9018. A breach of the latter could send the pair tumbling towards the June 15 low at 0.8965.

Conversely, if USD bulls keep the price within the channel, they need a daily close above the 200-DMA around 0.9147. In that outcome, the immediate resistance would be the 100-DMA at 0.9186.

The Relative Strenght Index (RSI), a momentum indicator at 34, shows a slight positive divergence, which usually signals that the pair will reverse the recent downtrend to the upside.

4-hour chart

he USD/CHF 4-hour chart depicts the pair has a solid downward bias, represented by the simple moving averages (SMA’s) above the spot price and successive lower-highs and lower-lows development. However, the Relative Strength Index (RSI) at 32 shows a positive divergence, meaning that despite lower lows in price action, the RSI is printing higher lows,

indicating that the pair could move to the upside. Nevertheless, to confirm its validity, the USD/CHF needs to reclaim 0.9100.