Yesterday, Thomas J. Jordan, the Chairman of the Swiss National Bank (SNB), noted that foreign exchange market interventions, as well as negative interest rates, are still in the arsenal of the central bank. Thus, the head of the regulator once again confirmed that if the Swiss franc strengthens, the SNB is ready to step in and make an intervention. The announcement took place at the time or after yesterday's strong rise of the Swiss franc against the single European currency. As for inflation, the chairman of the central bank sees it rising to the target level of 2%, although the increase is likely to be short-lived. Now let's analyze the technical picture of the USD/CHF pair.
Daily chart
On the daily chart, the effectiveness of the candlestick analysis is shown at its best. The emergence of two Doji candlesticks highlighted on the chart marked the end of the uptrend and signaled an upcoming reversal, which is actually happening now. At the time of writing, the Swiss currency is appreciating against the US dollar at an especially rapid pace. However, there is still enough time for the bulls to change the situation before the end of the session. In the meantime, the pair is ready to decline to the strong technical level of 0.9750. If the price rebounds from this level and a long lower shadow is formed in the existing candlestick, this can indicate the end of the downtrend, which is a good moment for opening long positions. However, judging by the intensity of the downward movement, this is unlikely to be a just corrective pullback. Once again, bulls have faced an obstacle at 1.0000, or the parity level. Notably, the pair has failed to rise above this key level for so many times. According to the daily chart, a bearish scenario is still in place so far. If the pair drops to 0.9750 and breaks through this level, the next target will be an equally significant and strong level of 0.9700. I think that it is still too early to set more distant targets. The bulls are in a very difficult situation now. They will be lucky to reverse the trend and push the price to the red Tenkan line located at 0.9925.
H4
On this time frame, the black 89-period exponential moving average was acting as strong support for as long as it could. As a result, the price made a strong and confident breakout of this moving average, leaving no doubts about a further decline. The main trading recommendation here is to sell the pair after short corrective upside pullbacks or in the course of a correction in a sideways channel. The levels of 0.9800, 0.9825, and 0.9860 look like good targets to sell from. I would recommend going long in case the price decreases to 0.9700. If this does not happen, watch out for the level of 0.9750 and the possible bullish reversal candlestick patterns on this and/or 1-hour chart.
Good luck!
