Key Reversal Pattern Developing on USD/CHF
28 November 2024
In today’s analysis, we focus on the American dollar to Swiss franc, which is forming a potential reversal pattern at the top of its recent uptrend. The pair had been in a strong uptrend, but the momentum has cooled, leading to the formation of a double top pattern. Alternatively, the same setup could also be interpreted as a head and shoulders pattern, with the recent upswing acting as the right shoulder.
Key Levels to Watch
The orange horizontal support, which marks the neckline of these patterns, is the crucial level to monitor. A break below this support, followed by a breach of the black uptrend line, would confirm a long-term sell signal. This would indicate a potential shift in momentum from bullish to bearish, opening the door for a deeper correction.
Conversely, if the orange support holds and the price rebounds, breaking back above recent highs, it would invalidate the bearish setup and act as a signal to go long. This scenario would suggest that the buyers remain in control and could push the pair to new highs.
Summary
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Bearish Scenario: A daily close below the orange support and black uptrend line would confirm the reversal and signal a long-term bearish trend.
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Bullish Scenario: A rebound from the orange support, followed by a move higher, would invalidate the bearish setup and signal renewed buying interest.
The outcome of this pattern will set the tone for the pair's mid- to long-term direction. Traders should watch these critical levels closely to determine the next move.