The US dollar is starting to move higher against the Swiss franc currency after the FOMC policy decision caused traders to move into the greenback as FED members sounded more bullish than many experts had been expecting.
Traders basically bought the US dollar and sold gold after the more hawkish than expected FED commentary, meaning that USD pairs, like the USDCHF, surged on the foreign exchange market after trading in a confined ranges on a multi-week basis.
Usually, when we see major range breakouts after weeks of price consolidation we tend to see strong trending price movements. Now that the USDCHF pair has staged the range break a move towards the 0.9200 area could be incoming.
It is also noteworthy that the USDCHF pair has an inverse relationship to the EURUSD pair. The EURUSD pair has recently broken under the 1.2000 support level, which bodes well for further USDCHF strength.
In terms of technicals, the USDCHF pair has finally moved above its trend defining 200-day moving average, meaning that the pair is now technically bearish. Bulls need to hold the price above the 0.9078 resistance level to keep this dynamic in place.
The ActivTrader Market Sentiment tool shows that some 76 percent of traders are bullish towards the USDCHF pair after the recent FOMC policy decision. Bullish sentiment is at elevated levels, so this is a worry, and could mean that the latest up move is overheated in the short-term.
It is also possible that a major sentiment extreme could build as the USDCHF pair continues to advance to the upside. If sentiment reach the 90 percent level or higher, then an explosive reversal in the USDCHF pair could be on the horizon.
USDCHF Short-Term Technical Analysis
The four-hour time frame shows that price has broken above the top of a large symmetrical triangle pattern and measuring its overall size could take the USDCHF towards the 0.9150 level in the short-term.
Traders may use any move back towards the top of the bottom, around the 0.9025 support level, could be seen as a buying opportunity. Any weakness back inside the pattern could cause a steep price drop towards 0.8900.
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USDCHF Medium-Term Technical Analysis
Looking at the daily time, the MACD indicator is showing that positive price divergence has formed during the recent multi-month decline in the USDCHF pair.
This is a very positive signs in the medium-term and the USDCHF pair would need to rally towards the 0.9250 level to reverse the mentioned bullish price divergence.
Simply put, this means that the USDCHF pair could be about to rally by a further 200 points if the MACD divergence is reversed over the coming days and weeks.
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