- USD / CHF gained momentum on Monday and hit new multi-month highs.
- The extremely overbought RSI on the day chart warrants some caution for bullish traders.
- Any slip below 0.9300 could continue to attract some buying.
USD / CHF picked up again on the first day of a new trading week and soared to the highest level since July 2020, around 0.9350 during the first half of the European session. The aforementioned level marks the 50% Fibonacci level of the 0.9902-0.8758 drop, if firmly broken it will set the stage for further gains.
Given the recent bullish breakout through the very important 200-day SMA and the 38.2% Fibonacci retracement, around 0.9200, the bias remains tilted to the upside. The emergence of some reversal buying on Monday adds credibility to the constructive outlook.
That said, the extreme overbought conditions on the day chart warrant some caution before positioning for any further appreciation moves. This makes it prudent to wait for some short-term consolidation or a modest pullback before the USD / CHF pair prolongs its recent strong bullish trajectory.
However, the USD / CHF pair seems poised to aim to regain the 0.9400 mark and move higher to test the 61.8% retracement around the 0.9460 region.
On the other hand, the 0.9300 zone now appears to protect from further declines. Any further pullback could be seen as a buying opportunity and remain capped near the daily lows, around the 0.9280-75 region. However, sustained weakness below could trigger a liquidation of long positions and drag USD / CHF towards 0.9200.
USD / CHF day chart
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