USDCHF looks poised for more upside, as the pair is breaking above an area of interest and neckline of a forex reversal signal pattern on its daily time frame. Stochastic is still moving up, indicating buying momentum.
As you can see, price appears to have formed a complex head and shoulders forex reversal signal pattern on its daily chart, indicating that the previous downtrend is already over and that a forex reversal signal will take place. A strong break past the .9150 mark could take the pair up by as much as 450 pips, which is the same height as the chart pattern.
Forex Reversal Signal and Forecast
Going long at the .9150 level with a stop below the .9000 major psychological level and a target of 450 pips or at .9600 could yield a 3:1 return on risk.
Bear in mind that the latest FOMC meeting minutes turned out bullish for the dollar, as policymakers started discussing tightening monetary policy sooner than anticipated. Meanwhile, growth in Europe has been weak and could continue to weigh on the Swiss franc.
With that, the fundamental bias for the pair is to the upside, with potential gains going all the way up to the .9700 previous highs. However, if the current resistance area holds, a short-term forex reversal signal might happen and lead to a test of the previous lows.
There are no event risks for the Swiss franc for the next few days, although the upcoming Jackson Hole Symposium could lead to strong forex reversal signal moves across the charts depending on the outcome. If Yellen backpedals on the plans to tighten policy sooner than anticipated and focuses on the risks to growth, the US dollar might be forced to return its recent gains and possibly push USDCHF back to the .8700 levels.
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