- USD / CHF regains traction on Friday and recovers the modest losses of the previous day.
- The formation of a bullish flag pattern on the 1 hour chart supports the prospects for further gains.
- The stage is set for a move above the 0.9100 level, towards the test of the 200-day SMA.
After having shown some resistance near the 100 hourly SMA, the USD / CHF pair has managed to regain positive traction on Friday and has now rebounded from the modest losses of the previous day. The pair is trading near the daily highs, around the 0.9060 region before the opening of the American session.
The aforementioned area marks the upper end of a three-day-old descending channel. Given the recent strong positive move from the mid-February lows near the 0.8870 area, the channel constitutes the formation of a flag pattern on the short-term charts and favors the bulls.
Meanwhile, the technical indicators on the 4 hour / day charts have maintained their bullish bias and have again started to gain positive traction on the 1 hour chart. This reinforces the constructive short-term outlook and supports the prospects for additional earnings.
That said, it will still be prudent to wait for a sustained breakout above the channel resistance before opening aggressive bullish positions. The USD / CHF pair could then aim to conquer the 0.9100 level, which coincides with the 61.8% Fibonacci retracement of the 0.9297-0.8758 drop.
Some subsequent purchases will reaffirm the bullish breakout and push the USD / CHF pair towards the challenge of the very important 200-day SMA, currently near the 0.9145 region.
On the other hand, declines towards the 0.9025-20 region (50% Fibonacci) could still be seen as a buying opportunity. This is followed by support near the 0.9000 round level and support at the 100-day SMA, currently around the 0.8985-80 region, which should help limit the decline.
A convincing break below that region will negate the constructive setup and spark some aggressive technical selling. The USD / CHF pair could then accelerate the decline towards the horizontal level of 0.8915 en route to the 23.6% Fibonacci near the 0.8885-80 region.
USD / CHF 1 hour chart
USD / CHF technical levels