Forex Technical Outlook: USD/CHF Rallies to Fresh Monthly Highs

The U.S. Dollar is back on offense with the greenback stronger against all its major counterparts this week. USD/CHF has broken through near-term resistance after reversing off support last week with our outlook weighted to the topside while above the weekly open.

USD/CHF Daily Price Chart

Technical Outlook:The Swiss Franc has been under considerable pressure (USDCHF higher) since rebounding off the lower parallel of this slope formation extending off the December high (red). The advance has continued to trade within the confines of a well-definedascending pitchfork formationextending off the yearly lows with the rally surpassing the median-line today in US trade.

The focus remains higher while above highlighted confluence slope support around ~9380with initial topside objectives eyed at9513, the 100% extension at9544and the 50% retracement at9613.

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USD/CHF 120min Price Chart

Notes:A closer look at Swissy price action sees the pair breaking above near-term resistance today at9459- the immediate advance remains viable while above this threshold with near-term bullish invalidation set to the weekly open at9371.

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Bottom line: Price just broke though near-term uptrend resistance and keeps the focus higher while within this formation. We're likely to get some pullback here as momentum drifts into overbought territory but from a trading standpoint, I’ll favor fading weakness while above9371targeting theupper parallels. A break below this level would invalidate the long-bias with such a scenario risking a drop toward the lower parallel, currently just below9300.

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USD/CHF IG Client Sentiment

A summary ofIG Client Sentimentshows traders are net-long USDCHF- the ratio stands at +2.57 (72.0% of traders are long) –bearishreading
Traders have remainednet-long since Nov 17th;price has moved 5.0% lower since then
Long positions are8.7% lower than yesterday and 4.8% lower from last week
Short positions are11.0% higher than yesterday and 21.3% higher from last week
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDCHF prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USDCHF price trend may soon reverse higher despite the fact traders remain net-long.