USD/CHF traded lower after it hit the downside resistance line drawn from the high of December 6th. Given that the rate continues to trade below that line, as well as below all three of our moving averages on the 4-hour chart, we would consider the short-term outlook to be negative.
If the bears are willing to stay in the driver’s seat and push the battle below the 0.9965 zone, we could see them aiming for the low of January 16, at around 0.9613. Another break, below that barrier, would confirm a forthcoming lower low on both the 4-hour and daily charts and may set the stage for extensions towards the low of September 21st, 2018, at around 0.9542.
Taking a look at our short-term oscillators, we see that the RSI turned down and just touched its toe below its 50 line, while the MACD is fractionally above both its zero and trigger lines, but shows sings that it could dip into negative waters soon. Both indicators suggest that the rate may start picking up negative momentum soon and corroborate our view for further declines.
In order to abandon the bearish case and start considering slightly higher areas, we would like to see a break above the 0.9700 zone. Such a move may signal the break above the aforementioned downside line and could initially pave the way towards the 0.9735 zone, marked by the high of January 13th. Another break, above 0.9735, could extend the recovery towards the peak of January 10th, near 0.9762. If the bulls are not willing to stop there either and push higher, we may then see them putting the 0.9795 zone on their radars. That zone acted as a support on December 26th, and could now play the role of a resistance.