One by one FX majors point towards a broader USD reversal, with the Swiss franc now coming onto our radar.
We can see on the weekly chart that USD/CHF has had a tough time above parity since October 2017. That’s not to say it hasn’t tried to hold above it, yet each time it has broken above this psychological round number it has rolled over again within days or weeks.
More recently we note the Swissy has failed to close above 1.0056 since printing a bearish pinbar at this level, and last week’s high marked a momentum shift prior to it crashing below parity once more. Therefore, we see further downside as quite likely at this stage.
Switching to the four-hour chart shows momentum is clearly bearish and its decline has made light work of 0.9955 support. However, as it is extended beyond its lower Keltner band and RSI is heavily oversold the pair could be at risk of mean reverting before losses continue. Therefore, it could pay to wait for prices to retrace or at least stabilise further to avoid entering the move too late. So we’re keeping an eye on the 0.9938/55 resistance zone as a retracement here may provide a better opportunity to enter short. However, given the bearish connotations from the weekly chart, we’re looking for this to head towards 0.9848 further out.