Technical Analysis – USDCHF shows improvement in Ichimoku cloud; stands near 2-month high

Melina Deltas, XM Investment Research Desk

USDCHF finally climbed above the strong support of 0.9760 that had been capping upside moves since late December and questions are rising now about whether the market can sustain the break in the coming sessions.  

The positive cross in the 20- and 40-day simple moving averages (SMAs) drove the market within the Ichimoku cloud, while the MACD oscillator is painting a rosy picture for the short-term timeframe as it runs comfortably above the trigger line. Also, the RSI indicator is still holding in the bullish territory.

Traders would be more eager to engage in buying activities if the price manages to surpass the nearby resistance at 0.9850, where the 23.6% Fibonacci retracement level of the 1.0235 – 0.9610 downleg is placed. If this is successfully breached, then the rally may next rest somewhere near the 50.0% Fibo of 0.9925 before touching the critical level of 61.8% Fibo of 1.0000.

On the flip side, the selling pressure could accelerate again if the market deteriorates below the 0.9760 former strong support area. Such a move could next bring the 0.9625 key barrier under the spotlight, which if violated could trigger sharper losses probably towards the 16-month trough of 0.9610.

Summarizing, USDCHF is expected to show improvement if the price overcomes the 0.9850 resistance zone after the rebound on the 0.9610 barrier on January 16.