USDCHF has erased a large part on the January – March rally, with the price extending its downtrend to a 3-month low of 0.8929 this week.
Having breached the 61.8% Fibonacci of the 0.8814 – 0.9471 uptrend, the bears are now eyeing the next Fibonacci level of 0.8909, a break of which will give way to the 0.8850 support region. Deeper, the bears may attempt to re-activate the long-term downtrend below the six-year low of 0.8814.
The technical picture keeps questioning any significant trend improvement as the 20-day simple moving average (SMA) has dipped back below the 200-day SMA, while the 50-day SMA also seems to be heading for a bearish cross with that line. Meanwhile, in momentum indicators, the MACD, the RSI, and the Stochastics continue to move sideways in the bearish territory, though a positive divergence is evidence as to the RSI and the Stochastics seem to be making higher lows, raising optimism that bullish forces could strengthen soon.
The path higher, however, could be a rocky one as several obstacles may quickly block the way. The 20-and 200-day SMAs at 0.9027 and 0.9079 respectively could immediately halt any upside moves above the 61.8% Fibonacci of 0.8984, which is currently acting as resistance. If these barriers prove easy to clear, the spotlight will turn to the 50-day SMA and the 38.2% Fibonacci of 0.9198.
In the medium-term picture, the pair would need an aggressive upturn above the 0.9471 peaks for an outlook improvement. To summarize, USDCHF keeps endorsing its short-term downtrend, though upside corrections cannot be excluded in the near term as downside risks seem to be weakening.