USD/CHF, the popular currency pair pairing the US Dollar against the Swiss Franc, is showing mounting signs of a potential trend reversal, according to recent technical analysis. Following a five-week uptrend, indicators are aligning to suggest that a short-term bearish movement may be on the horizon, marked by a bearish two-bar reversal pattern and multiple trendline breaks.
Bearish Two-Bar Reversal Pattern Unfolds
A key indicator of the potential reversal in USD/CHF is the formation of a bearish Two-Bar reversal pattern observed on both Monday and Friday. This pattern, recognizable by a large green bullish candle immediately followed by a red bearish candle of similar length, signals a shift in market sentiment from bullish to bearish. Known for indicating near-term weakness, the two-bar reversal pattern often marks the end of an uptrend and the onset of a downtrend, suggesting that USD/CHF may be primed for a move lower.
Trendline Breaks Reinforce Bearish Outlook
Adding to the bearish evidence is the repeated breakage of the trendline supporting USD/CHF’s October rally. According to technical analysis, trendline breaches can indicate weakening momentum and an increased probability of reversal. In this case, USD/CHF has broken the trendline not once, but three times, signaling persistent bearish pressure on the pair. Analysts point to this repeated trendline redraw as further evidence of the possible breakdown in USD/CHF’s upward momentum.
Also read : USD/CAD Hits 1.3900 Support- Insights On The CAD’s Weakness And Future Rate Cut Implications
Key Level to Watch: 0.8615
A critical support level to watch for confirmation of the reversal is 0.8615, the low observed on November 4. Should USD/CHF fall below this threshold, it could be the tipping point that confirms a downtrend, potentially setting the pair on a path toward the next major support level at approximately 0.8550. This level aligns with the 50-day Simple Moving Average (SMA), which may act as a support zone.
