Bulls hope to extend control from key support

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  • USD / CHF has halted the monthly decline in demand territory.
  • The bulls will be looking for a correction and entry opportunity in the lower time frames.

The net positioning of the Swiss franc has declined from an institutional perspective over the past two weeks, trimming both bullish and bearish positioning.

However, the US dollar has also been correcting, which has tipped the balance in favor of an upward move in the pair.

The following is a top-down analysis showing an overall bullish bias.

USD / CHF monthly chart

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The bulls enter a demand area on the monthly chart and open opportunities at the lower time frames to target the old structure, also known as new resistance.

At least a retracement to the 38.2% Fibonacci would be expected, which converges with the previous lows, being the new resistance.

USD / CHF weekly chart

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The weekly chart shows a bullish doji and major resistance.

If the current candle completes the wick seen, it represents a retracement to the upside on the daily chart and prospects for a bullish continuation.

USD / CHF daily chart

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Following the doji and the bullish engulfing candle, the price rose.

Support has been established at the 38.2% Fibonacci retracement of the bullish momentum.

A bullish continuation would be expected from this support area.

USD / CHF 4-hour chart

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As illustrated, a likely scenario from here would be the creation of a W formation on the 4-hour chart.

The possible bullish momentum, completing the W formation, would be expected to retreat to at least the 38.2% Fibonacci retracement.

There is also the confluence with the neckline of the W formation in that area.

An upward extension towards the weekly resistance area would then be likely to complete a daily upward extension.

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