Technical Analysis – USDCHF tumbles near descending line around 0.8900

Melina Deltas, XM Investment Research Desk

USDCHF is retreating near the penetrated downtrend line, after finding strong resistance at the 0.9040 barrier. The strong selling interest is confirmed by the technical indicators. The RSI is plunging from the overbought zone to the neutral area, while the MACD is losing momentum in the positive territory. The 20- and 40-day simple moving averages and the Ichimoku lines are sloping downwards.

Should the pair stretch south, the 40-day SMA at 0.8883 could provide immediate support before the pair touches the 0.8845 bottom. A significant step lower could bring the bearish sentiment back into play, sending the price probably towards the 0.8750 level, reached on January 6.

On the flip side, the 0.9040 mark may halt upside movements before jumping towards the 200-day SMA at 0.9180. If traders continue to buy the pair, the price could test the 0.9205 hurdle, ahead of the 0.9300 psychological level.

In the short-term picture, USDCHF has been trading bearish again over the last few sessions, despite the break of the descending trend line on February 4. Still, if the pair manages to cross above the 200-day SMA, the bearish outlook could switch into a neutral one.

To sum up, the pair is still in a downtrend in the short- and long-term timeframes.