As noted in previous reviews, the US dollar fell against all major competitors except the Japanese yen last week. In particular, the Swiss franc strengthened against the US currency by 1.46%, which was the second result after the Canadian dollar. As previously expected, Joe Biden's victory in the US presidential election led to increased risk sentiment in the market and weakened the position of the US dollar. The technical picture for the USD/CHF currency pair fully confirms this trend.
Weekly
On the weekly chart of the dollar/franc currency pair, strong and significant support broke out at 0.8980 during the last five days of trading, and the auction ended below this level at 0.8917. It is also worth noting that the USD/CHF pair has confidently fallen below the most important psychological and technical level of 0.9000. Attempts by bulls to raise the price of the instrument were limited to 0.9088. The red line of the Tenkan indicator Ichimoku played an active role as resistance. I would like to note that the dollar/franc currency pair works out the broken levels very clearly, that is, it gives a rollback to them, and then turns back towards the breakdown. In this case, we can expect a pullback to the broken price zone of 0.8980-0.9000, after which the pair may well resume its downward trend. Naturally, this will happen if market sentiment does not change and the US currency continues to remain under selling pressure. At this stage of time, in addition to Joe Biden's victory, expectations for the start of mass vaccination of the population against COVID-19, as well as the adoption of a new fiscal stimulus program in the United States to support the national economy, maintain positive market sentiment and investors' desire to take risks. Market participants also expect that the US Federal Reserve (FRS) will resort to further easing its monetary policy to smooth out the negative effect of the COVID-19 pandemic on the world's leading economy.
If the downward trend of USD/CHF continues, the nearest target of bears for this instrument looks like the price area of 0.8820-0.8800. If this zone manages to push through and gain a foothold below 0.8800, the decline will not only continue but may also increase, where another psychological level of 0.8500 will become a further mark for players to lower the rate. To change the mood and change the technical picture, the dollar/franc bulls need to return the quote above 0.9000, and then update the previous highs of 0.9088 with the mandatory closing of weekly trading above this mark.
Daily
Friday's candle, which was formed after the release of mixed data on the US labor market, can be considered a reversal model and lead to a corrective growth of the pair. At the time of writing this review, this is exactly what is observed. The USD/CHF pair is slightly strengthening and may well roll back to the price zone of 0.8980-0.9000, where the support level is broken and the psychological round mark is 0.9000. Given the presence of the red Tenkan line at 0.9010, the zone for rollback and sales planning should be designated as 0.8980-0.9010. If the pair reaches these prices, and the daily, four-hour, and hourly charts begin to show bearish reversal patterns of Japanese candlesticks, this will be a signal to open short positions on USD/CHF. At the moment, this is the main trading recommendation for this currency pair.
