USD/CHF has been in a recovery mode since yesterday, when it hit support at 0.9030. Nonetheless, overall, the pair continues to trade within the downside channel that’s been containing the price action since September 28th, as well as below all three of our moving averages on the 4-hour chart. Thus, we would consider the short-term outlook to be negative for now, even if we see some further recovery within the channel.
A break above 0.9090 may confirm the case for additional gains and may pave the way towards the crossroads of the 0.9124 level and the upper bound of the pre-discussed channel. The bears may jump into the action from near that territory and perhaps push the rate down for another test near 0.9030. If that level doesn’t hold this time around, its break would confirm a forthcoming lower low and may pave the way towards the psychological round figure of 0.9000, which provided support on August 31st and September 1st.
Shifting attention to our short-term oscillators, we see that the RSI rebounded from its below-30 zone and now looks to be heading towards 50, while the MACD, although negative, lies above its trigger line and points north as well. Both indicators detect slowing downside speed and support the notion for some further recovery within the channel before the next negative leg.
In order to abandon the bearish case and start examining whether the bulls have gained the upper hand, we would like to see a decisive break above 0.9124. Such a move would also take the rate above the upper end of the channel and may initially encourage advances towards the peak of October 19th, at 0.9165. Another break, above 0.9165, could carry more bullish implications, perhaps paving the way towards the 0.9198 level, marked by the high of October 8th.