USD/CHF is slowly getting into the squeeze zone, as seems to be forming a small ascending triangle, clearly visible on the 4-hour chart. That said, this doesn’t necessarily mean that the pair could only move higher from here. We should carefully continue monitoring the activity within the formation and wait for a clear signal. This will come when USD/CHF breaks through one of the sides, which could be a first sign that it is establishing a direction for the near-term. For now, although we stand flat with regards to the broader picture, we see the case for some more recovery within the formation.
Certainly, we can say that USD/CHF is trading above its short-term upwards moving trendline (lower side of the ascending triangle), that’s why we expect a continuation to the upside. The first good area of resistance could be the 0.9955 mark, a break of which could send the pair towards the slightly more important area of resistance at 0.9990 (upper side of the ascending triangle). This is where the big battle between the bulls and the bears could start again over the faith of USD/CHF. If the bulls take control, then they could drive the rate towards the 1.0035, or even the 1.0055 level, marked near the highs of May. We should also mention that USD/CHF could drop a bit lower from current levels to test the upwards moving trendline, from which it could bounce back up towards the mentioned levels above.
If the previously mentioned trendline is not able to withstand the downside pressure, then a further decline could open the door towards the 0.9890 level, a break of which could be seen as the green light for the bears to drive USD/CHF towards the 0.9855 barrier, marked by the low of the 25th of June. Slightly below sits another good area of support at 0.9825, which if broken could spark some more interest from the bears, in order to push the pair down to test the 0.9790 zone. This area is near the lowest point of June.
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