USD/CHF Price Analysis: Bulls remain in control, overbought conditions warrant caution

• USD/CHF gained strong positive traction on Monday and shot fresh multi-month tops.
• Extremely overbought RSI on the daily chart warrants some caution for bullish traders.
• Any slide below 0.9300 might continue to attract some dip-buying and remain limited.

The USD/CHF pair caught some fresh bids on the first day of a new trading week and shot to the highest level since July 2020, around mid-0.9300s during the first half of the European session. The mentioned level marks the 50% Fibonacci level of the 0.9902-0.8758 downfall, which if cleared decisively will set the stage for additional gains.

Given the recent bullish breakout through the very important 200-day SMA and the 38.2% Fibo. level around the 0.9200 mark, the bias remains tilted in favour of bullish traders. The emergence of some dip-buying on Monday adds credence to the constructive outlook.

That said, extremely overbought conditions on the daily chart warrant some caution before positioning for any further appreciating move. This makes it prudent to wait for some near-term consolidation or a modest pullback before the USD/CHF pair prolongs its recent strong bullish trajectory.

Nevertheless, the USD/CHF pair seems all set to aim back to reclaim the 0.9400 round-figure mark and climb further towards testing the 61.8% Fibo. level, around the 0.9460 region.

On the flip side, the 0.9300 mark now seems to protect the immediate downside. Any further pullback might still be seen as a buying opportunity and remain limited near the daily swing lows, around the 0.9280-75 region. However, sustained weakness below might trigger some long-unwinding trade and drag the USD/CHF pair towards the 0.9200 mark (38.2% Fibo. level).

USD/CHF daily chart

Technical levels to watch