USD/CHF Trading at Key Resistance Factors as it Approaches 0.90

USD/CHF Trading at Key Resistance Factors as it Approaches 0.90

USD/CHF has been bullish most of May after finding support around 0.87.

USD/CHF daily chart:
usdhf 6/3/2014 daily chart

Price broke above the 0.8952 resistance, which completed a double bottom seen in the daily chart. As the us dollar – swiss franc pair approaches 0.90, it is testing both a falling trendline and the 200-day SMA.

So far, the rally is stalling at these resistance factors, forming a bearish divergence with the RSI. As the CHF is positive correlated to the EUR, traders are likely tempering with the recent bullish outlook ahead of Thursday’s ECB monetary policy announcement.

Bullish scenario:
If the USD/CHF can break and stay north of 0.90 after Thursday’s ECB risk event, the next common resistance will be in the 0.9125-0.9156 area (2014- highs).

USD/CHF 4H Chart
usdchf 6/3 4H chart

Bearish outlook:
Going down to the 4H chart, we see that the key short-term support is at 0.8933. A break below 0.8930 will open up downside risk towards the 0.8850, a previous resistance pivot. A break below 0.8850 can revive the bearish outlook, at least towards the 2014-low around 0.87.

Note that the 4H RSI pushed above 70 and has stayed above 40. According to Andrew Cardwell’s RSI methodology, this represents a bullish momentum in play. If the RSI can push back above 60, it would reflect bullish continuation. However, if the RSI dips back below 40, the market is at best in consolidation, which has a prevailing bearish bias, and thus puts the focus on the 2014-lows.

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