Baxia Markets
April 04, 2024

Technical Analysis: USDCHF Shows Weakness, But Bullish Momentum Persists

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In the realm of forex trading, USDCHF has exhibited signs of weakness, with the pair breaching a crucial support level at 0.9056 following the release of adverse US data. The downtrend resulted in a substantial 70-pip drop in USDCHF, although it managed to maintain its position above the value area of the volume profile indicator, providing a semblance of stability. Following the decline, the market staged a recovery, reclaiming approximately 50 pips. However, for this rebound to signify a bullish reversal, it is imperative for the market not to close below yesterday's low at 0.9027.image-png-Apr-04-2024-02-45-33-6255-PM

Technical analysis reveals that both the Exponential Moving Averages (EMA) 50 and 200 are indicating weaker bullish momentum, primarily due to the EMA 50 nearing convergence with the EMA 200. Typically, a divergence between the two EMAs may signal a continuation of a bullish trend. Furthermore, oscillator indicators corroborate a bullish sentiment, with the Moving Average Convergence Divergence (MACD) signal line hovering above the zero level and the Relative Strength Index (RSI) steadfastly maintaining its position above 40%.

In the short term, the trend for USDCHF appears bullish, with the majority of technical indicators suggesting that bullish momentum remains intact. However, market participants remain vigilant, particularly regarding the potential for a bullish reversal. Traders are closely monitoring key support and resistance levels, including yesterday's low at 0.9027, to gauge the market's trajectory amidst evolving economic data and geopolitical developments.

In conclusion, USDCHF's recent movements underscore the delicate balance between bullish and bearish forces within the forex market. While the pair has experienced a temporary setback following the breach of a key support level, the resilience displayed above the value area and the subsequent rebound hint at the underlying bullish sentiment. Nevertheless, traders remain cautious, recognizing the importance of key technical levels and ongoing market dynamics in shaping the future direction of USDCHF.

Key Takeaways:

  1. USDCHF breached support at 0.9056 after adverse US data, but recovered 50 pips.
  2. EMA 50 approaching EMA 200 indicates weaker bullish momentum.
  3. Oscillator indicators show bullish sentiment despite recent weakness.
  4. Market remains above value area of volume profile, providing stability.
  5. Short-term trend for USDCHF remains bullish, with potential for reversal monitored.

Key Economic Releases to Watch Today

USD, Initial Jobless Claims

Forecast 52.8 vs Previous 52.6

CAD, Trade Balance

Forecast 0.70B vs Previous 0.50B



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