USD/CHF Weekly Outlook

The rebound from 0.9634 extended further to as high as 1.0623 last week but upside momentum is seen diminishing as displayed in bearish divergence conditions in 4 hours MACD and RSI. Break of 1.0422 support indicates that an intraday top is already in place. Hence initial bias will be on the downside this week for lower channel support (now at 1.0169). Break will put 0.9995 support into focus. On the upside, above 1.0498 will turn intraday outlook neutral first.

In the bigger picture, a medium term bottom is in place at 0.9634. Subsequent rally from there is still treated as correction to whole medium term down trend only. Short term focus is on the channel support. On the one hand, as long as this channel holds, rebound from 0.9634 could still extend further to resistance zone of 1.0890 to 1.1596. With 38.2% retracement of 1.3283 to 0.9634 at 1.1028 in side the range. But strong resistance should be seen there.

However, break of the channel support will be the first alert that rise from 0.9634 has already completed with three waves up to 1.0623. Further break of 0.9995 support will confirm this case and bring deeper decline to retest 0.9634 low. Also, in such case, the corrective nature of the rise from 0.9634 will maintain the medium term bearish outlook.

In the longer term picture, a pattern of lower highs is clearly seen in USD/CHF since the medium term down trend begins at 1.3283. While 0.9634 could be a medium term bottom, there is no clear indication of long term trend reversal yet. 1.1596 resistance will be a key factor that's required to confirm long term down trend reversal, at least before any clear reversal pattern forms. Meanwhile, the structure of the current rise from 0.9634 will provide the early indication on whether it's merely a correction in the longer term down trend only.

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