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10 May 2024 | FXGT.com

USD/CHF at Crossroads: Long-Term Resistance Versus Ongoing Bullish Trend

  • Bullish trend meets long term resistance: The USD/CHF pair has experienced a significant uptrend since the start of 2024, appreciating by approximately 8%. However, this trend recently encountered significant long-term resistance at the ₣0.92 level, resulting in shift to bearish momentum over the past week. The resistance at ₣0.92 coincides with the 200-week moving average and matches the high from October 2023, establishing it as a critical resistance point.
  • Impact of US Labor Market Data: The bearish pressure of the past week has largely been driven by weaker labour market data from the US, which has increased expectations for potential rate cuts by the Federal Reserve. This shift in monetary policy outlook has raised discussions about a broader change in the Fed’s stance.
  • Market Dynamics: Despite the recent correction, the daily timeframe remains in a structured uptrend. However, the pair is testing a significant area of support at ₣0.90. This level coincides with the daily 45 EMA channel and the lower boundary of the upward trendline channel which has been a consistent support feature since the year’s start.
  • Bullish Scenario: Signs of support above the ₣0.90 area could suggest that the current consolidation is merely a pause in the ongoing bullish trend. A break above the short-term resistance at ₣0.91 could restart bullish momentum, potentially initiating a new short-term uptrend.
  • Bearish Indicators: The ₣0.90 level is seen as critical in defending the ongoing bullish trend on the daily timeframe. A break below this threshold could change the medium-term outlook and indicate a deeper correction, with the next support level outlined at ₣0.89. Furthermore, the previous weekly candle demonstrated strong bearish pressure after meeting resistance, hinting that a decline below its low of ₣0.90 could reinforce bearish trends.
  • Looking Ahead: Attention now turns to next week’s US inflation data, with PPI and CPI scheduled for release. The reaction to this upcoming data will be crucial, potentially acting as a catalyst for further directional moves in the market. A sustained break above ₣0.91 could validate continuation signals, while a fall below ₣0.90 may signal a shift in the ongoing trend, targeting lower supports.

USDCHF 1 Hour Chart

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