- USD/CHF retesting the 50DMA from below after last week’s drop.
- RSI, MACD signal downside risk, but morning star pattern hints at a rebound.
- Break above 0.9050 could open 0.9155, while failure risks a slide to 0.8920.
Summary
USD/CHF is again testing the 50-day moving average (DMA)—this time from below—offering potential trade setups depending on how price action evolves around this key level. With little on the economic calendar this week in either the US or Switzerland, and having temporarily disconnected from its primary driver of yield differentials, technical signals take on greater importance in assessing directional risks.
USD/CHF Battle Brewing at 50DMA?
Source: TradingView
The three-candle evening star pattern completed last week has so far led to only limited downside, but it did break through key levels—first shattering uptrend support established in September before slicing through the 50DMA. However, the move stalled ahead of the January 27 swing low of 0.8966 before rebounding to retest the 50DMA from below, forming a three-candle morning star pattern in the process—often seen near bullish turning points. That should have traders on alert for a potential break above the 50DMA.
However, RSI (14) continues to set lower lows, and MACD remains in a downtrend, generating a bearish signal on price momentum. As such, I remain neutral on directional bias. But with price hovering near the 50DMA—a level that’s often respected—it presents potential trade setups.
If USD/CHF fails to break and hold above the 50DMA, shorts could be established beneath the level, with a stop above horizontal resistance at 0.9050 for protection. Possible targets include 0.8966 and a support zone from around 0.8920 down to 0.8895.
Alternatively, if USD/CHF breaks and holds above the 50DMA, longs could be considered above 0.9050 with a stop beneath for protection. For this setup to work, the price would need to clear the former uptrend, putting a retest of the February 12 swing high at 0.9155 and the recent cycle peak of 0.9200 in play.
CHF Disconnects from Yield Differentials
Source: TradingView
Unlike in the recent past, USD/CHF has shown little correlation with US Treasury yields or US-Swiss yield differentials across various tenors over the past month. It still retains a relatively strong correlation with EUR against the USD, though that’s been weakening.
With little major event risk on the calendar in either nation this week, traders may want to place greater emphasis on price signals when assessing potential setups.