USDCHF is in the final stage of consolidation after giving up 290 pips over the last three weeks. While it doesn’t necessarily signal the end of this year’s losses, the bullish pattern that has emerged on the intraday charts points to a relief rally that would test the former 0.9650 support level.
But first, a look at the daily time frame to get a better perspective of where the pair is currently trading.
Previous trend line resistance that extends from the January 2015 (pre-SNB debacle) high is now acting as support. But with stiff resistance just 100 pips above current prices, the window of opportunity is too tight for the daily chart.
With this in mind, we turn to the intraday charts. A quick study of the 1-hour time frame shows a terminal range that has been in place since late March. Often viewed as a reversal pattern, the falling wedge below could give way to a relief rally toward the 0.9650 handle.
To be clear, I will only entertain a long position if we see some form of bullish price action following a break of resistance. The combination of the lower time frame, counter-trend nature of the setup and recent market volatility require an additional layer of conviction before putting on a trade. At least that’s how I’m approaching this one.