Technical Analysis – USDCHF tests the bearish grasp in short-term picture

Anthony Charalambous, XM Investment Research Desk

USDCHF’s bounce from the 0.9628 low has stalled around the 0.9769 level, which is the 38.2% Fibonacci retracement of the down leg from 1.0022 to 0.9612. However, as positive momentum appears to be improving with the bullish stance displayed in the red Tenkan-sen line, an advance into the Ichimoku cloud may unfold.

The MACD continues to increase above its red trigger line and the zero mark, while the RSI hovers above the 50 level. That said, traders need to be aware of the downward sloping simple moving averages (SMAs), which warn of the bearish picture, provided the bears return.

If buyers reemerge and overcome the lower-band of the Ichimoku cloud around 0.9785, the 50.0% Fibo of 0.9817 – ovelapping with the upper-band of the cloud – could be next to restrict the ascent. Climbing higher, a more sustained push would be required to overcome a fortified resistance region from the swing high of 0.9832 to the 61.8% Fibo of 0.9865, coupled with the 200-day SMA. Clearing this region, which also encapsulates the inside swing low and 100-day SMA, the 0.9917 resistance may prevent the price from reaching the 1.0022 area of tops.

Alternatively, if the pair pivots at the lower-band of the cloud, initial support could come at the 50-day SMA at 0.9745 ahead of the 23.6% Fibo of 0.9708, where the Tenkan-sen line also lies. Steering below the Ichimoku lines, the 0.9628 low and the multi-month bottom of 0.9612 could challenge the drop. Even lower, the important trough of 0.9540 from 21 September 2018 could be next to draw attention.

Overall, buyers would need to break above the 61.8% Fibo of 0.9865 and the 200-day SMA to shift the short-term negative picture to a neutral-to-positive one.