FX.co ★ USD/CHF: bullish pattern in play

The USD/CHF pair crashed in the short term as the Dollar Index turned to the downside. It's trading at 0.8599 at the time of writing above today's low of 0.8580. The price action developed a potential bullish formation. Still, a new leg higher is far from being confirmed as the downside pressure remains high.

Fundamentally, the FED delivered a 25-bps rate hike as expected. Today, the ECB is expected to increase the Main Refinancing Rate by 25 bps as well. Furthermore, the US is to release high-impact data. Only better-than-expected US data could save the greenback from the downside.

USD/CHF: Strong Demand Zone!

As you can see on the H1 chart, the USD/CHF pair dropped within a down channel. This formation could bring us new opportunities. The 0.8566 lower low stands as a downside obstacle and target.

As long as it stays below the downtrend line, the price could extend its sell-off. Technically, after its strong upwards movement, a sell-off was expected. Now, it is challenging the confluence area formed at the intersection between the flag's downside line with 0.8566.

USD/CHF Outlook!

A valid breakdown below 0.8566 and through the downside line activates more declines.

On the other hand, staying above 0.8566 and making a valid breakout through the downtrend line and through 0.8617 is seen as a bullish signal.