- The USD/CHF pair is trapped within a down channel pattern, only an upside breakout may bring a bullish reversal.
- The price action signalled that the downside is over, but the DXY continues to drop, so the pressure remains high.
- In the short term, the pair could come down to test and retest the immediate support levels before jumping higher.
Our USD/CHF forecast had seen the pair move into a corrective phase but the downside movement could be over. The price action signalled that the price could turn to the upside again. It has dropped within a channel pattern, an upside breakout from this formation could signal that the downwards movement is over.
As you already know, the USD/CHF pair dropped before and after the US NFP on Friday. It seems that the US Dollar was too overbought in the short term. The Non-Farm Payrolls was reported at 531K in October versus 455K expected and compared to 312K in September.
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Moreover, the Unemployment Rate dropped unexpectedly lower from 4.8% to 4.6%, even if the specialists expected potential drop only to 4.7%. The Average Hourly Earnings come in line with expectations, reporting a 0.4% growth.
Today, the Fed Chair Powell speech and remarks could bring more volatility into the markets. Surprisingly or not, the USD/CHF pair has managed to rebound even if the Dollar Index was into a corrective phase in the short term after failing to take out 94.50 static resistance.
USD/CHF Forecast: Price Technical Analysis – Down Channel
As you can see on the H4 chart, the USD/CHF has found support on the descending pitchfork’s median line (ML) and now it has stabilized above 0.9117 level. Now is traded right below the descending pitchfork’s upper median line (UML) which stands as a dynamic resistance.
This line stopped the previous upside momentums. So, a valid breakout through this upside obstacle may activate further growth, a bullish reversal. Still, it’s premature to talk about a larger growth as long as the rate stands within the descending pitchfork’s body.
Technically, a new false breakout, any bearish pattern, or its failure to reach the upper median line may signal a new sell-off. In the short term, the USD/CHF could come back down to test and retest the immediate support levels before jumping higher. The United States inflation data could be decisive on Wednesday.
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