USDCHF drifted down to 0.9017 after facing resistance around the familiar long-term constraining zone of 0.9070.
The negative slope in the RSI and the Stochastic oscillator on the four-hour chart suggests market sentiment may remain downbeat in the coming sessions. The MACD has slipped back below its red signal line, increasing the likelihood of another leg down too.
Still, with the pair trading within a bullish channel and having marked new higher highs above the 0.9000 level recently, which looks to be the neckline of an inverse head and shoulders pattern, the current downside move could be a corrective part of the upward pattern.
The 50-period simple moving averages (SMAs) could provide some footing at 0.9000 ahead of the channel’s lower boundary seen near 0.8980. Should the bears breach the latter point, the pair may have another opportunity for a rebound somewhere between the broken descending trendline from November 2022 at 0.8950 and the 200-period SMA. If the sell-off continues, the next floor could be around 0.8920 or lower at 0.8895.
On the upside, buyers will wait for an extension above 0.9070 before they target the channel’s upper band at 0.9120. Note that the price peaked around the same location on April 10th. Hence, a continuation higher could motivate fresh buying towards the 0.9180-0.9200 region. We will closely watch the key descending line from June 2022 as well at 0.9230.
Summing up, the ongoing bearish action in USDCHF could gain new legs in the short-term. That said, traders may not get upset unless the sell-off extends below the bullish channel and the 0.8950 level.
