Technical Analysis – USDCHF prints an inverse H&S pattern
May 17, 2023 2:27 pm
USDCHF looks set to complete a bullish inverse head and shoulders pattern (H&S) around the two-year low of 0.8850, feeding optimism that the downtrend from November 2022 has reached a bottom.
Specifically, the price is currently testing the pattern’s neckline around 0.9000, with the RSI and the MACD promoting a bullish breakout as the former has crossed above its 50 neutral mark and the latter is ready to stretch its uptrend into the positive region.
Yet, some caution is required given the overbought signals coming from the stochastic oscillator. Moreover, the 50-day simple moving average (SMA) and the former support region of 0.9070 are nearby and could limit potential bullish actions. Should the bulls stay in charge, the recovery may extend up to 0.9155 and then continue towards the key resistance trendline seen at 0.9220.
In the event the price gets rejected at 0.9000, it may drift lower to seek support around the 20-day SMA at 0.8918. A deeper decline could shift the spotlight to the 0.8855 handle, a break of which would violate the bullish pattern. In this case, the bears may try to stretch the downtrend towards the support line from December at 0.8755.
In brief, USDCHF is signaling a positive trend reversal, with traders waiting for a confirmation above 0.9070.
USDCHF looks set to complete a bullish inverse head and shoulders pattern (H&S) around the two-year low of 0.8850, feeding optimism that the downtrend from November 2022 has reached a bottom.
Specifically, the price is currently testing the pattern’s neckline around 0.9000, with the RSI and the MACD promoting a bullish breakout as the former has crossed above its 50 neutral mark and the latter is ready to stretch its uptrend into the positive region.
Yet, some caution is required given the overbought signals coming from the stochastic oscillator. Moreover, the 50-day simple moving average (SMA) and the former support region of 0.9070 are nearby and could limit potential bullish actions. Should the bulls stay in charge, the recovery may extend up to 0.9155 and then continue towards the key resistance trendline seen at 0.9220.
In the event the price gets rejected at 0.9000, it may drift lower to seek support around the 20-day SMA at 0.8918. A deeper decline could shift the spotlight to the 0.8855 handle, a break of which would violate the bullish pattern. In this case, the bears may try to stretch the downtrend towards the support line from December at 0.8755.
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