On the
daily chart below, we can see that USDCHF has recently broke out of the major
downward trendline and has
now extended towards the 0.91 handle. The moving averages have
crossed to the upside confirming the change in trend. The rally has come amid
strong US economic data in May that have made the market to reprice interest
rates expectations on the hawkish side. In fact, the market is now giving a 65% probability for a 25
bps hike at the June meeting. This can all change with the next NFP and CPI
reports of course, so traders will be very attentive to those two releases.

USDCHF Technical Analysis

On the 4
hour chart below, we can see that USDCHF has recently bounced again on the
upward trendline, as that has been a strong support since the price bottomed in
early May, and kept offering buyers good entry points. We can notice that now
the price is diverging with the
MACD right
when it approaches the resistance at 0.91.
This is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we may get a pullback either to the broken resistance turned support at
0.9070 or even better the upward trendline.

On the 1
hour chart below, we can see that we have a strong support zone at the 0.9070
level. In case USDCHF pulls back, the buyers will be leaning on that level with
a defined risk just below it and target the breakout of the 0.91 handle for new
highs afterwards. The sellers, on the other hand, should defend the 0.91 handle
here targeting new lower lows and thus offer the pullback to the support zone.

As
mentioned above, the trend is bullish, so the sellers will have much more work
to do before getting back the control. In fact, only a break below the upward
trendline would switch the bias to the downside and see the sellers piling in
more aggressively.

This article was written by ForexLive at www.forexlive.com.