USDCHF Analysis the Market Reverses Below a Key Level Using a Reversal Pattern
USDCHF reverses by employing a head-and-shoulder reversal pattern. Having broken out of a triangle pattern, the market started an uptrend. The market’s momentum, however, gradually dwindled as price rose through the supply levels. The market initially made higher highs and lows but then dropped to a lower high to create the right shoulder for the reversal pattern. USDCHF has now dropped below the trend line.
USDCHF Important Levels
Supply Zones: 0.92130, 0.93770
Demand Zones: 0.91070, 0.89460
USDCHF is set to resume the downward trend with which it began the month of April. During that period, price reverses after a firm rejection at 0.94780. From there, the market descended till it dropped to the 0.89460 demand level. The demand level, however, halted further drops in the market and price reverses upward at this level. Subsequently, USDCHF rose till it was caught in a descending channel through which it slid down for about two and half months before breaking upward.
The market broke out of the descending channel after tapering using the 0.90170 demand level. Price immediately started gyrating upwards till it hit the 0.93770 supply line, where a huge volatility drop occurred, as shown by the ATR (Average True Range) indicator. The RSI (Relative Strength Index) indicator further reveals that even though USDCHF broke upwards, sellers were actively working in the background. This is evident as the RSI plunged despite the price uptrend. Eventually, the market dropped also.
Market Predictions
On the 4-hour chart, the market has dropped below the uptrend line and is currently fluctuating around 0.92130 as sellers progressively plunge the market. From all indications, the market is set for more drops. The RSI has dropped to the selling half of its chart, and the ATR indicator indicates that price will continue to fall gradually due to a lack of market volatility.
USDCHF is expected to drop to 0.90170.
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