The Swissie has been rallying strongly recently but the pair could be running out of momentum as it edges closer to the 0.9966 resistance level. Furthermore, a combination of stochastics, chart patterns, and fundamentals are hinting that a reversal is on the cards. Consequently, Swissie Bulls might be in for a shock in the near future.
Firstly, the most damning evidence which is suggesting the USD/CHF is about to make a move a lower is a Gartley Pattern. Specifically, a relatively robust bearish bat pattern has formed and is hinting at future downside potential for the pair. Additionally, the USD/CHF is nearing the 0.9966 price level which has proven difficult to break.
USD/CHF Daily Chart
In addition to the bat pattern, looking at the H4 chart reveals that an ABC formation is nearing completion. What’s more, this ABC pattern constitutes the final leg of the Bat which will be adding to any speculation surrounding the pair. However, it is worth keeping in mind that the ABC could in reality be an incomplete 3 drive or Elliot wave pattern. If this is the case, the Swissie could be set to climb at least once more before subsequently crashing.
USD/CHF 4-Hour Chart
Whilst the formation of a bearish bat and ABC pattern are convincing, stochastic oscillator readings give further reason to suspect an imminent fall for the USD/CHF. Importantly, the oversold reading is present on not only the daily but also the H4 and H1 charts. As a result, selling pressure will be mounting later in Friday’s session, especially as London and New York come online.
On the fundamental front, a contraction in the Philadelphia Federal Manufacturing Index and softer than expected US Unemployment Claims figures could limit or even reverse the recent bullishness of the pair. Considering the result was forecasted at a 3.3 increase, the 1.8 contraction in the manufacturing index is likely to make its presence felt as the trading week comes to an end. Likewise, the underwhelming 278K US Unemployment Claims figures could significantly limit the pair’s upwards mobility during the remainder of the session.
Ultimately, the current resurgence of the greenback is likely to be relatively short lived. Moreover, the recent FOMC minutes can be attributed to causing the relative bullishness of the USD. As a result, the Swissie will likely correct to the downside in the near future. There is a chance that the pair has another rally in the interim, but in the end, the underlying weakness of the US economy should drive the pair back to support.