USDCHF bears have been leading the market since November, driving the pair to a 2½-year trough of 0.9246 last week. This week, however, bulls seem to be taking back control, with prices being on track to break two-week highs.
In the 4-hour chart, technical indicators suggest that the recent uptrend could be in play in the near-term. The pair managed to enter the Ichimoku cloud for the first time after a month, surpassing the 50-period simple moving average (SMA) which acted as a strong support during that timeframe. Today’s bullish (golden) crossover between the 20- and the 50-period SMAs also enhances the bullish signals. Besides that, momentum indicators show that an advance is getting ahead. The RSI increased speed and is currently a breath below 70, hinting that upside movements might lose steam if it successfully breaks into oversold levels (above 70). The MACD has crawled back to positive territory, surpassing its signal line.
Should the pair head up, the Fibonacci retracement levels of the downleg from 0.9639 to 0.9246 (January 22 – February 2) could provide resistance. The 50% Fibonacci of 0.9443 could come first into view and any violation of this long-term support could confirm the start of a bullish phase, extending the uptrend towards the 61.8% Fibonacci of 0.9488. Steeper increases could also test the 78.6% Fibonacci of 0.9556.
On the flip side, if prices decline instead, an immediate support could be found at the 38.2% Fibonacci of 0.9395 and then further below a stronger obstacle could be met at the 23.6% Fibonacci of 0.9336 which coincides with the 20- and the 50-period SMAs. However, only a leg below the previous low at 0.9246 would resume the underlying downtrend, reverting USDCHF back to bearish mode.