The USDCHF has launched a nice rally after reaching multi-week lows as visible in this H4 chart. This currency pair has formed a rising wedge formation which is a bearish chart formation. Current price action is approaching its descending 200 DMA and we believe this currency pair will start a counter-trend correction back down to its ascending support level with a potential breakdown to its 50 DMA.
MACD has performed a bullish centerline crossover and indicates that momentum has turned bullish. This may point to future strength after a necessary correction which could eventually lead to a breakout above its 200 DMA. RSI has approached overbought territory y and currently flirts with extreme conditions.
We recommend a short position at 0.9415 with a potential second entry to this trade above 0.9550. We also recommend traders to place a stop buy order at 0.9500 in order to hedge the open short position.
Traders who wish to exit this trade at a loss are advised to place their stop loss level at 0.9500. We will not use a stop loss order and execute this trade as recommended. Place your take profit level at 0.9315.
Here are the reasons why we call the USDCHF currency pair lower
- USDCHF has formed a rising wedge formation which is a bearish chart formation
- Current price action approaches descending 200 DMA which poses major resistance
- Latest candlestick pattern formed a spinning top at resistance
- RSI trades in overbought territory and flirts with extreme conditions
- Profit taking after strong rally