Price action on CAD/CHF has caught our eye, as it suggests a bearish breakout could be pending.

Since Wednesday, the cross has been caught within a 36-pip range. It can’t stay in there for ever, although without top-tier calendar events from Canada or Switzerland today, we may have to rely on external events to provide a breakout catalyst.

Still, we believe this is one worth watching. We saw back in November that a failed, bullish triangle resulted in a 400-pip decline. So, it’s interesting to note a similar pattern has emerged, prior to prices breaking down early March. If a similar move were to materialise, it could send the cross beneath the 0.7178 low over the coming weeks.

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Since breaking lower early March and finding support at 0.7640, prices have retraced in a corrective fashion. It’s far from a textbook example, but is reminiscent of a bearish wedge. A gravestone doji and spinning top showed a hesitancy to break above the 61.8% retracement level, and yesterday’s bearish inside day shows compression is underway.

A clear break beneath 0.7523 could see bears target the 0.7460 low, although keep in mind we can see a 38.2% Fibonacci retracement level just above here. If bears retain control, the view becomes less obscured beneath 0.7441 for a potential run for the 2018 low. However, if we’re to see a clear break above 0.7560, the bearish bias goes onto the backburner for now.

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