The USD/CHF currency pair has recently formed a new uptrend after bouncing back from the lows it hit on August 29. The RSI indicator, which measures momentum, has indicated an exit from overbought territory, suggesting the possibility of a pullback within the uptrend.
Since hitting the bottom on August 29, USD/CHF has been on a path to recovery. The uptrend began with a bullish Three White Soldiers Japanese candlestick pattern, where three green candlesticks of a similar size follow a new low, indicating a potential upward movement.
With the new uptrend in place, the likelihood of further upside movement is high, as the trend is seen as favorable for traders. The overall sentiment points towards a positive momentum for USD/CHF.
However, there is a possibility of a temporary pullback before the pair continues to move higher. This is supported by the RSI indicator exiting the overbought zone, signaling a potential correction in the trend.
The RSI exit from overbought territory coincided with the formation of a bearish Hanging Man Japanese candlestick pattern, further reinforcing the potential for a correction. The current candle is red, indicating a possible downward movement in the near term.
In case of a correction, the USD/CHF pair could retrace back to support levels at 0.8503 or 0.8485. Despite the potential pullback, the dominant short-term uptrend is expected to resume and continue moving upwards.
Traders should keep an eye on key resistance levels, with a break above 0.8541 likely to lead to further resistance at 0.8557 and 0.8617. Overall, the outlook for USD/CHF remains positive, with the potential for further upside movement in the near future.
