USD/CHF technical analysis: Corrective bounce likely

USD/CHF's 4-hour and daily charts are showing signs of seller exhaustion.
The pair could rise to the 10-day moving average resistance during the day ahead.

Omkar Godbole FXStreet Contributor

USD/CHF could see a corrective bounce to the 10-day moving average (MA) of 1.0938 during the day ahead as technical charts are flashing early signs of a bearish-to-bullish trend change.

Notably, the relative strength index (RSI) on the 4-hour chart has created higher lows, contradicting lower lows on the price chart in the last few days.

That bullish divergence of the RSI indicates the bears are losing power and that bulls are ready to control the market again. The multiple long-tailed daily candles are also pointing to seller exhaustion.

Hence, a bounce could be in the offing. As of writing, the pair is trading at 1.08957, representing little change on the day.

The bullish divergence will be invalidated if the spot finds acceptance below 1.08631 (Aug. 5 low).

4-hour chart

Daily chart

Trend: bounce likely

Pivot points

1. R3 0.9802
2. R2 0.978
3. R1 0.9753
PP 0.9731
1. S1 0.9704
2. S2 0.9682
3. S3 0.9655

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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