USDCHF has been in the green almost every single day since mid-April, stretching its exciting rally to a new two-year high of 0.9758 before easing a bit to 0.9700 early on Friday.
The continuous winning track is making investors wonder whether the bull run is overstretched as the RSI and the Stochastics seem to lose pace after advancing well above their 70 and 80 overbought levels, respectively. That said, both indicators are still hovering in the overbought territory and the market trend is clearly upwards and endorsed by the rising simple moving averages (SMAs). Hence, the 0.9800 psychological level will probably remain under scope for a bit longer.
Should buyers speed beyond 0.9800, the next challenge could be the 2020 peak of 0.9899. Interestingly, this overlaps with the 261.8% Fibonacci extension of the 0.9459 – 0.9194 downfall.
If the bearish scenario unfolds instead, the price may initially seek support around 0.9688. That area has been limiting both upside and downside movements over the past two days. Hence, a close lower from here could confirm another bearish correction towards 0.9623, which is also the 23.6% Fibonacci of the ongoing rally. Slightly lower, the red Tenkan-sen line at 0.9598 could prevent the test of the 38.2% Fibonacci of 0.9546. Yet, if the bears want to ruin the positive trend, they will need to sink deeper and particularly below the 50% Fibonacci and the previous high of 0.9459.
Summarizing, USDCHF maintains a strong bullish outlook in the short- and long-term picture, though a pullback is becoming increasingly likely as overbought signals flash red.
