USDCHF came under significant downside pressure this week, quickly trimming its six-week bullish streak and diving back below the 0.9300 level.
Although the pair has dipped below the supportive 20-day simple moving average (SMA), the medium-term market structure remains skewed to the upside, with the golden cross between the 50- and 200-day SMA promoting the recovery.
Turning to the short-term picture, the pair is in a sideways move, but the momentum indicators seem to be leaning to the bearish side as the MACD keeps losing strength below its signal line and towards zero, while the RSI is set to stretch below its 50 neutral mark.
A step below yesterday’s trough of 0.9267, where the 200-period SMA is positioned on the four-hour chart, could last until the price enters the 0.9220 – 0.9180 area, formed by the March support zone and the 50-day SMA. The 38.2% Fibonacci of the 0.8756 – 0.9471 up leg is also encapsulated within this zone, adding extra importance to the region. A break lower would shift the short- and medium-term outlook to negative and neutral respectively, bringing the 50% Fibonacci of 0.9112 and the 200-day SMA next into view.
On the upside, the 23.6% Fibonacci of 0.9300 is currently keeping the bulls under control. Should it give way, the 20-day SMA may attempt to stop the price from reaching the key restrictive zone around 0.9375. Beyond the latter, the door would open for the key resistance of 0.9438 – 0.9471.
In brief, USDCHF is neutral with potential for a downside correction in the short-term window. In the medium-term, the bullish outlook is still intact as long as the price holds above 0.9217.