Technical Analysis – USDCHF rebounds, but downtrend still in play

Marios Hadjikyriacos, XM Investment Research Desk

USDCHF recovered somewhat after touching a three-month low of 0.9375, but the rebound has been capped by the 50-period simple moving average (SMA) on the four-hour chart, and negative forces seem to have taken over again. The broader picture is still bearish, with the pattern of lower highs and lower lows not broken by the latest rebound.

Momentum oscillators like the RSI and the MACD are both near their neutral levels, not revealing much about the next directional wave.

If the 50-period SMA continues to cap upside movements, another drop in the pair may encounter preliminary support around 0.9460. If violated, traders would turn their sights back to the three-month low of 0.9375, which halted the latest wave of selling. Lower still, the March 12 trough of 0.9320 could cap further declines.

On the upside, assuming the 50-period SMA doesn’t hold, the next target for buyers may be the 0.9550 area. Moving higher, the neighborhood around 0.9650 – which also encapsulates the 200-period SMA at 0.9637 – may be a tougher obstacle. A move above that zone could turn the near-term outlook to a more neutral one, opening the way for 0.9730.

Summarizing, despite the latest rebound, the short-term picture is still negative. Yet, a move above 0.9650 could change that.