In today's analysis, let's delve into the technical setup on American Dollar to Swiss Franc (USD/CHF), which is presenting one of the most striking occasions on the market.
Currently, the pair is showcasing a giant Head & Shoulders pattern, a classic bearish reversal structure that has been developing since mid-November. The key components of this pattern include a blue rectangle highlighting the head and shoulders formation, an orange neckline, and a black uptrend line, all of which are pivotal to the price action.
Late this week, the price broke below both the neckline and the uptrend line, confirming the bearish pattern. This breakout was accompanied by a sharp decline that began during Friday’s European session and accelerated further following the release of Non-Farm Payrolls (NFP) data. The breakdown has delivered a clear long-term signal to sell, and sellers remain in control as long as the price stays below the orange neckline resistance.
However, in the aftermath of the selloff, we are now observing signs of an attempted reversal, which aligns with broader attempts to recover across pairs involving the US dollar. If USD/CHF manages to climb back above the orange resistance, it would indicate a false bearish breakout, which could serve as a strong buy signal and potentially invalidate the Head & Shoulders pattern.
For now, the bearish sentiment prevails, but the next moves on Monday and Tuesday will be critical in determining whether this setup continues to confirm bearish momentum or shifts toward a bullish recovery. Traders should monitor the orange resistance closely, as it remains the defining line between bearish continuation and a bullish reversal.