- USDCHF speeds up, approaches crucial zone
- Overbought signals detected
- Important resistance at 0.8888
USDCHF gained significant positive momentum during the early European trading hours on Tuesday after a couple of weak sessions, extending its short-term uptrend from December’s low to 0.8816.
Despite the current euphoria in the market, traders will have to be prepared for a potential downside correction as the price is testing the support-turned-to-resistance trendline near December’s high. The 200-day simple moving average (SMA) at 0.8845 and the tentative long-term descending trendline from the 2022 top at 0.8888 are also in the neighborhood.
The RSI and the stochastic oscillator are already near overbought levels. Hence, if upside pressures fade out immediately, the price may reverse lower to seek support near the 0.8725 constraining zone. A break lower could stall around the 20-day SMA and the descending trendline from the 2023 high at 0.8678, while deeper, the decline could stabilize near the 50-day SMA and the tentative ascending trendline from the December low at 0.8630. Failure to hold there could bolster selling appetite towards 0.8550.
Should the pair find enough buyers to cross above the 0.8880 threshold, the uptrend could strengthen towards the 2024 resistance line at 0.8950. Then, the bulls may push again for a close above the 0.9020 bar.
In brief, USDCHF is not out of the woods yet, despite its latest acceleration. Traders would like to see a continuation above 0.8888 to increase their buying orders.
