I’m seeing a textbook trend setup on the 4-hour time frame of USD/CHF.
Will we see another channel bounce this time?
Or is a reversal in the cards?
USD/CHF: 4-hour
USD/CHF 4-hour Forex Chart by TradingView
ICYMI the May FOMC statement spurred quite a drop for the U.S. dollar, even though they kept rates unchanged as expected.
As it turned out, dollar bulls seemed disappointed about the lack of hawkish rhetoric, as Fed head Powell reiterated that their next move is still likely to be a rate cut. Besides, policymakers also agreed to slow down the pace of reduction of bond holdings from their balance sheet, which was viewed as a form of easing.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the U.S. dollar and the Swiss franc, then it’s time to check out the economic calendar and stay updated on daily fundamental news!USD/CHF retreated from its channel resistance upon hearing the announcement, pulling back to the mid-channel area of interest at the 50% Fib and R1 (.9170).
Support seems to be holding so far, but a deeper correction might still reach the 61.8% level closer to the .9150 minor psychological mark or the channel support near the pivot point level (.9130).
If any of these hold as a floor, look out for a sustained bullish move back to the swing high or the channel resistance around R2 (.9240). After all, the 100 SMA is still above the 200 SMA to suggest that the uptrend is more likely to gain traction than to reverse.
Just make sure to keep an eye out for the Swiss CPI and retail sales release when trading this one. Good luck!