Bottom line: USDCHF medium term outlook turns bullish against 0.9150 lows. The short term counter trend drop seems to be complete yesterday as bears hit the estimated target around 0.9450 levels. Bulls are looking poised to take control back from here on.
Fundamental Outlook:
USDCHF bounced back sharply from intraday lows at 0.9380 as US Dollar gained across the board yesterday. The safe haven US Dollar gained traction as risk sentiment collapsed. The Dow Jones (-6.9%) and SPX500 (-5.9%) registered their worst single day drop since March 23, 2020. We have kept readers prepared for a dramatic collapse in Global Equity Markets since last several trading sessions and this could just be the beginning.
GBPJPY exchange rate has reversed lower since last 4 trading sessions from 139.74 levels. This was much expected and discussed earlier as the anti-risk Japanese Yen was set to gain. Furthermore, with risk assets reversing sharply yesterday, it has only added to the bearish sentiment in GBPJPY and USDJPY respectively.
Technical Analysis:
USDCHF hits the projected target at 0.9450 levels yesterday. The currency had dropped below 0.9400 momentarily before pulling back sharply. A potential higher low has been carved at 0.9380 and ideally bulls should remain poised to take control back, going forward.
USDCHF had earlier rallied from 0.9150 through 0.9900 levels, taking out resistance at 0.9840. A counter trend drop was expected and prices dropped in a corrective fashion towards 0.9450/0.9380 yesterday. An A-B-C drop seems to be complete now, and USDCHF is expected to resume higher.
Also note that USDCHF has found support just around fibonacci 0.618 retracement of the earlier rally. Furthermore, a bullish Pin bar candlestick pattern or Hammer has also appeared on the daily chart. This indicates potential bullish reversal if prices stay above 0.9380.
Traders might be willing to initiate fresh long positions with protective stops below 0.9300 and projected targets above 1.0170 levels respectively.
Prepared by
Harsh Japee, Technical Analyst.
USDCHF Chart
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