The USD/CHF pair has likely entered a short-term uptrend, breaking above the crucial 0.8989 resistance level (June 11 high). This bullish breakout suggests a higher probability of continued upward movement for the pair.
Upside Targets in Sight:
- 50-Day SMA: The initial target for the pair is the 50-day Simple Moving Average (SMA) at 0.9034.
- Fibonacci Extension: Further upside potential lies at 0.9084, the 0.618 Fibonacci extension of the recent bottoming pattern, which resembles a bullish Inverse Head and Shoulders (H&S) pattern.
Bullish Confirmation:
A decisive close above the 0.9000 psychological level and the 200-period SMA would further strengthen the bullish outlook and pave the way for the pair to reach its upside targets.
Short-Term Pullback Potential:
Despite the bullish breakout, there are signs of a potential short-term pullback. The Relative Strength Index (RSI) is currently in overbought territory, and a bearish divergence could lead to a retracement towards the 0.8950 support level. Additionally, the formation of a Tweezer Top candlestick pattern suggests a possible reversal in the very near term.
Market Sentiment and Key Takeaways:
The USD/CHF pair’s bullish momentum is driven by a combination of factors, including a strengthening US Dollar and a weakening Swiss Franc. However, traders should remain cautious due to the possibility of a short-term pullback. A break above key resistance levels would confirm the bullish trend, while a failure to hold support could lead to a deeper correction.
