USDCHF Touches 2-Month High, Bullish Momentum May Be Easing

My FX Forum

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USDCHF’s remarkable recovery after touching its lowest since April of 0.9541 on September 21 has brought the pair to a two-month high of 0.9958 earlier on Thursday. The pair has eased a bit from that peak, though it remains roughly 400 pips above late September’s low.

The Tenkan and Kijun-sen lines are positively aligned in support of the short-term bullish bias that is in place. However, notice that the two lines have eased, suggesting that positive momentum may be running out of steam.

Given a move above the previously-tracked high of 0.9958, resistance may occur around the parity level (1.00) that could hold psychological significance. Higher still, 1.0067, a more than one-year peak, would increasingly come into scope.

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On the way down, immediate support could be taking place around 0.9925 which was congested between mid-June to late August. Not far below lies the current level of the Tenkan-sen at 0.9903, with a downside violation turning the focus to 0.9859, which is the 23.6% Fibonacci retracement level of the upleg from 0.9187 to 1.0067. The 100-day (simple) moving average line and the Ichimoku cloud top roughly coincide with this point. Steeper losses would turn the attention to the zone around the 50-day MA at 0.9796.

In terms of the medium-term picture, trading activity taking place above both the 50- and 100-day MAs, as well as above the Ichimoku cloud, is indicative of a positive outlook. However, the two MAs being roughly flat at the moment is a sign that the bullish structure remains fragile and further rallies are needed to solidify it.

Overall, the short- and medium-term outlooks are looking mostly bullish, though they both currently appear relatively fragile.