- USD/CHF breaks the range, peaks and corrects.
- The pair could be forming a bullish flag pattern with additional upside potential.
USD/CHF retreats after breaking out of its multi-week range and rising substantially on Friday.
Since breaking out of the range, the pair is now in a short-term uptrend and since it is a key tenet of technical analysis theory that “the trend is your friend”, the odds favor a continuation to the upside.
USD/CHF 4-hour chart
USD/CHF has pulled back in recent periods and in doing so has formed what appears to be a Bull Flag pattern. These are made up of a strong rally called the “mast” and a pullback (the “flag”). If this is the case, then a break above the flag’s 0.8607 high would lead to a recovery to around 0.8619 (Fibonacci 61.8% Mast Extrapolated Up) at the low and around 0.8650 (100% Fibonacci Mast Extrapolated Up). mast) maximum.
A minimum upside target is also at 0.8617 (Aug 14 low), or 0.8622 (Fibonacci extrapolation of 61.8% of the height of the previous bullish range). A truly bullish move could reach 0.8675, the 100% extrapolation of the range height.
The Relative Strength Index (RSI) moved into overbought territory as the breakout rally peaked. It has since returned to neutral territory during the price pullback. This is a bearish signal and suggests that a deeper correction could develop. Support lies at 0.8550 (September 12 high) and even stronger support at 0.8540 (range top).
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
