The rally in USD/CHF from the previous week pushed the pair to a key technical resistance level this week.
Can the bulls maintain their momentum?
Or is USD/CHF ready to extend the long-term trend?
USD/CHF currency pair 4 hours Chart by TradingView
As you can see, the USD/CHF pair made its highest and lowest levels since the beginning of May when the pair hit resistance at the 0.9200 psychological zone.
The downtrend took the pair to a low of 0.8840 last week, but the surprise interest rate cut by the Swiss National Bank (SNB) encouraged some selling in the Swiss franc. It also didn’t hurt the USD bulls when a round of risk aversion hit the markets and increased demand for the USD.
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The USD/CHF pair is now trading just above the 0.8950 psychological level, which is not too far from the R1 pivot point line (0.8982), the 200 SMA on the 4-hours chart, and the top of the downward channel that has been in place since then. The downward trend has begun.
Are we looking at a pullback opportunity for USD/CHF bears?
The appearance of bearish candles or flat trading below the R1 pivot point line opens the possibility of a decline that could take the USD/CHF pair back to the psychological level of 0.8900. If there is technical and fundamental momentum behind it, USD/CHF could fall to the lows of 0.8840 before extending its downtrend!
But if the pro-USD and anti-CHF trend continues in the next few days, USD/CHF could extend its uptrend instead.
Look for bullish candles or continuation trading above the descending channel and R1 pivot point areas as it could lead to a bullish breakout of USD/CHF.
What do you think? How will the USD/CHF pair trade in the next few days?
