CHF Strengthens Against USD: Bullish Exhaustion Signals Potential Downtrend Continuation

• The CHF is the second-best performing major currency against the USD based on a one-month rolling basis.
• The recent four weeks of up move of USD/CHF has flashed out bullish exhaustion conditions that advocate the potential continuation of its medium-term impulsive down move.
• 0.8800/8830 is the key resistance zone to watch on the USD/CHF.

In the past four weeks, the Swiss Franc (CHF) is the second best-performing major currency against the USD where the CHF just depreciated by -1.40% with the GBP that has come in the first place (-0.67% against the USD) based on a one-month rolling calculation as of 22 August 2023 at this time of the writing.

 

 

 

 

Fig 1:  Rolling 1-month performance of USD against major currencies as of 22 August 2023 (Source: TradingView, click to enlarge chart)

In the lens of technical analysis, the rally of +269 pips that was seen on the USD/CHF from its 27 July 2023 low of 0.8553 to the recent 21 August 2023 high of 0.8828 is likely to be a corrective rebound within a medium-term downtrend that is still intact since its 8 March 2023 due to the emergence of several bullish exhaustion elements.

 

 

Daily bearish candlestick emerged right at descending channel resistance

 

 

Fig 2:  USD/CHF medium-term trend as of 22 Aug 2023 (Source: TradingView, click to enlarge chart)

Yesterday’s price action of USD/CHF has staged a bearish reaction right at the upper boundary of the medium-term descending channel that coincides with the downward-sloping 50-day moving average with both acting as a confluence of resistance at 0.8830.

 

 

Started to evolve into a minor downtrend

 

 

Fig 3:  USD/CHF minor short-term trend as of 22 Aug 2023 (Source: TradingView, click to enlarge chart)

Since its 21 August 2023 high of 0.8828, the price actions of USD/CHF have started to oscillate into a minor downtrend in a series of “lower highs and lower lows”.

Watch the 0.8800 key short-term pivotal resistance a break below 0.8755 near-term support (also the 20-day moving average) exposing the next support at 0.8700 (minor swing lows of 4/10 August 2023) in the first step.

On the flip side, a clearance above 0.8800 negates the bearish tone to set sight again on the 0.8830 medium-term resistance.