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The US dollar is in recovery mode against the Swiss franc currency and is now approaching some extremely important technical levels on the price chart. A number of technical signs are warning that the USDCHF pair could rally sharply if the 0.9000 resistance level is breached.
Positive and negative signs still exist for the USDCHF pair. The technicals are improving in the short-term as the USDCHF pair is technically bullish above its 200-period moving average, around the 0.8900 level, however, the overall trend is still bearish while the USDCHF remains trapped below its trend defining 200-day moving, at 0.9150.
Looking at the recent history of the USDCHF, the pair has been slowly moving higher after forming an important technical bottom around the 0.8750 level earlier this year. Both lower and higher time frame analysis shows that the USDCHF pair has been making higher highs and lower lows.
Typically, the USDCHF pair has an inverse relationship with the EURUSD pair. So, it is also important to keep a close eye on what happens to the EURUSD. It is also noteworthy that the USDCHF pair is very much still a safe haven play.
We should also consider that the USDCHF pair has a strong correlation with US bond yields. Rising United States bond yields should be very supportive for the US dollar going forward if they continue on an upward trajectory.
With risk sentiment remaining at elevated levels, it is generally not supportive for the Swiss franc currency. What we probably need to see is a pure US dollar play, and a continuation of strength in greenback to continue to help lift the USDCHF pair above the 0.9000 level.
The ActivTrades Market Sentiment tool shows that some 75 percent of traders are bullish towards the USDCHF pair. Bullish sentiment is now at elevated levels, so traders need to be careful as retail traders are typically on the wrong side of the trend.
Market sentiment may need to correct towards neutral, or indeed more sustainable levels in order for the USDCHF pair to continue to advance and form a powerful need short-term trend.
USDCHF Short-Term Technical Analysis
The four-hour time frame continues to highlight the overall important of the 0.8950 to 0.8940 support area. The neckline of a large bullish inverted head and shoulders pattern is found around the 0.8940 level.
According to the overall size of the inverted head and shoulders pattern the USDCHF pair could be headed towards the 0.9150 resistance level over the short-term horizon.
Source By ActivTrader.
The Parabolic SAR indicator on the mentioned time frame is also issuing a buy signal while the USDCHF pair trades above the 0.8950 level, making the 0.8940 to 0.8950 area extremely important in the short-term.
USDCHF Medium-Term Technical Analysis
Looking at the daily time, a bullish breakout from a descending price channel pattern is close to taking place, with the USDCHF pair currently testing towards the top of the channel, around the 0.8960 level.
Typically, falling price channel patterns are considered to be amongst the most powerful bullish reversal patterns. Traders should expect the USDCHF pair to rally towards the 0.9150 level if a bullish breakout takes place from the top of the falling price channel.
Source By ActivTrader.
