USD/CHF Technical Analysis | Forexlive
On the daily chart below, we can
see that the price has been trading in a falling channel for a quarter now. The
USD lost ground on the back of falling inflation and rate cuts being priced for
this year.
Recently things changed as the
blockbuster NFP report yet again showed an
extremely tight labour market and the ISM
Services PMI jump back into expansion triggered a repricing of
rates expectations. We can also see that the channel is diverging with the MACD.
Generally, this loss of momentum
triggers a pullback to the nearest support/resistance or trendline before another leg lower/higher.
In fact, the price pulled back to
the top of the channel and if we see it breaking up, then a much bigger
correction may kick in with the price possibly rallying all the way back up to
0.96 and the 50% Fibonacci
retracement level.
On the 4 hour chart below, we can
see that after reaching the resistance, the price pulled back to the
50/61.8% Fibonacci retracement area. The price bounced there as the US
CPI report yesterday showed that the disinflationary trend is
slowing and the M/M inflation rate is still too high.
In fact, the
market repriced future interest rates expectations with the
terminal rate moving up a bit and rate cuts being priced out. The range now is
clear: get above the resistance at 0.9287 and the breakout is confirmed with
further upside expected, get below the support at 0.9150 and the sellers will
start to target the low at 0.9050.
On the 1 hour chart below, we can
see that the moving
averages are now pointing north and the price is right at the upper bound of the
channel. Today we have the US
Retail Sales report, which is expected to be positive. A beat
to the expectations should give us the breakout higher, while a miss should
give us another pullback to the support zone at 0.9150.