USD/CHF Technical: Potential continuation of medium-term downtrend

  • The CHF is the second-best performing major currency against the USD based on a one-month rolling basis.
  • The recent four weeks of up move of USD/CHF has flashed out bullish exhaustion conditions that advocate the potential continuation of its medium-term impulsive down move.
  • 0.8800/8830 is the key resistance zone to watch on the USD/CHF.

In the past four weeks, the Swiss Franc (CHF) is the second best-performing major currency against the USD where the CHF just depreciated by -1.40% with the GBP that has come in the first place (-0.67% against the USD) based on a one-month rolling calculation as of 22 August 2023 at this time of the writing.

Fig 1:  Rolling 1-month performance of USD against major currencies as of 22 August 2023 (Source: TradingView, click to enlarge chart)

In the lens of technical analysis, the rally of +269 pips that was seen on the USD/CHF from its 27 July 2023 low of 0.8553 to the recent 21 August 2023 high of 0.8828 is likely to be a corrective rebound within a medium-term downtrend that is still intact since its 8 March 2023 due to the emergence of several bullish exhaustion elements.

Daily bearish candlestick emerged right at descending channel resistance

Fig 2:  USD/CHF medium-term trend as of 22 Aug 2023 (Source: TradingView, click to enlarge chart)

Yesterday’s price action of USD/CHF has staged a bearish reaction right at the upper boundary of the medium-term descending channel that coincides with the downward-sloping 50-day moving average with both acting as a confluence of resistance at 0.8830.

Started to evolve into a minor downtrend

Fig 3:  USD/CHF minor short-term trend as of 22 Aug 2023 (Source: TradingView, click to enlarge chart)

Since its 21 August 2023 high of 0.8828, the price actions of USD/CHF have started to oscillate into a minor downtrend in a series of “lower highs and lower lows”.

Watch the 0.8800 key short-term pivotal resistance a break below 0.8755 near-term support (also the 20-day moving average) exposing the next support at 0.8700 (minor swing lows of 4/10 August 2023) in the first step.

On the flip side, a clearance above 0.8800 negates the bearish tone to set sight again on the 0.8830 medium-term resistance.

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Kelvin Wong

Kelvin Wong

Senior Market Analyst, OANDA at OANDA
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities.

Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets.

In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.