Technical Analysis – USDCHF moves sideways, but negative trend still in play

Marios Hadjikyriacos, XM Investment Research Desk

USDCHF has been consolidating in recent weeks, staying confined within a narrow sideways range between 0.9550 and 0.9420 since mid-June. Nonetheless, the broader price structure still consists of lower peaks and lower troughs, with the pair also trading below a downtrend line drawn from the peaks of March.

Short term momentum oscillators are near their neutral levels, echoing the recent lack of direction. The RSI is just below 50 and seems to have flatlined, while the MACD is basically at zero.

If the bears wrestle back control, the first target to the downside may be the 0.9440 level. A break would bring into scope the lower bound of the recent range at 0.9420. If violated too, the door would open for the three-month low of 0.9375. A successful penetration there would signal that the broader downtrend is back in force, paving the way for 0.9320 – the March 12 low.

On the upside, buyers would likely encounter initial resistance around 0.9530, a break of which would turn all eyes to the upper bound of the range at 0.9550. A break higher would be a very encouraging sign for the bulls, and may bring into play the 200-period simple moving average (SMA) at 0.9572, which also encompasses the 0.9585 zone. But for a more significant change in the trend, buyers would need to punch above 0.9650 and the downtrend line.

In sum, the very short-term picture is neutral as long as the price remains between 0.9550 and 0.9420, though the broader outlook is still negative.