USD/CHF Price Rejected by 0.92, Finds Fed Tapering, Data Support

• USD/CHF false breakout above the upper median line (UML) could signal a potential decline.
• Only escaping from the descending pitchfork’s body could signal an important upwards movement.
• DXY’s further rise after the current retreat could force the pair to jump higher as well.

The USD/CHF price dropped and is located at 0.9170 level far below 0.9206 today’s high. The pair has started falling as the Dollar Index has found strong resistance at a higher high. DXY’s minor decline forced the greenback to lose ground versus its rivals.

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Technically, the current decline could be only a temporary one. The Dollar Index is still bullish, so further rise could force the greenback to increase as well. We have a strong positive correlation between DXY and the USD/CHF.

Fundamentally, the pair has dropped a little because the Switzerland Trade Balance was reported at 5.25B in July versus the 4.78B estimate. The indicator figures came worse than expected after 5.47B in the previous reporting period.

The USD could start increasing again as the US Unemployment Claims dropped further from 377K to 348K in the previous week. The economic indicator has come in below the 362K estimate. Also, from the fundamental point of view, USD is bullish after the FOMC Meeting Minutes.

USD/CHF price technical analysis: False breakout turns price lower

The USD/CHF price has found resistance at the 50% (0.9198) retracement level and now is traded back within the descending pitchfork’s body. Unfortunately, it has registered only a false breakout above the immediate resistance levels.

Its decline is natural after printing the major bearish engulfing. Also, its failure to stabilize above the weekly pivot point (0.9176) indicates bearish pressure. Technically, it was hard to believe that USD/CHF will register a valid breakout above the upper median line (UML) before making an accumulation in the short term.

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The support is seen at the 0.9110 weekly S1. The USD/CHF pair could come down to test and retest the 38.2% retracement level before jumping higher. Personally, I believe that a valid breakout above the upper median line (UML) after its failure to approach and reach the median line (ML) may signal further rise towards 0.9232 resistance again.

Only a new lower low, dropping and stabilizing under 0.9099, could invalidate the upside scenario.

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