USD/CHF skyrocketed yesterday, breaking above the 0.9375 key barrier, which had been preventing the pair from moving higher since Mar. 18. This, combined with the fact that there is an upside line supporting the price action taken from the low of Mar. 31, paints a positive short-term picture in our view.
At the time of writing, the rate seems to be oscillating slightly below another key resistance zone, at around 0.9460, marked by the peak of Mar. 16. That zone stopped the rate from climbing higher on Apr. 1, 2021, and Jul. 16, 2020.
The bulls may decide to take a break after testing that zone or even before that happens, thereby allowing a downside correction. However, we see a decent likelihood to use the 0.9375 territory as a rebound zone this time, which could encourage them to climb above the 0.9460 obstacle.
Such a break could carry larger bullish implications, perhaps paving the way towards the 0.9555 area, defined as a support by the high of Jun. 12, 2020. Looking at our short-term oscillators, we see that the RSI turned down and exited its above-70 zone, while the MACD, although above both its zero and trigger lines shows signs that it could top soon. Both indicators detect strong upside speed and hint at a potential slowdown, which supports the notion of a setback before the next leg north.
On the downside, we would like to see an apparent dip below 0.9325, marked by the low of Apr. 14, before examining a bearish reversal. This could confirm the break below the upside line taken from the low of Mar. 31 and perhaps initially target the low of Apr. 12, at 0.9287.
If the bears get encouraged to add to their positions, then a break lower could see scope for larger declines, perhaps towards the low of Apr. 5, at 0.9237. Slightly lower lies the 0.9195 barrier, marked by the low of Mar. 31, which could be tested if the 0.9237 zone doesn’t hold.
