USDCHF Breaks Higher but Faces Key Resistance: Will the Uptrend Resume?

USDCHF Breaks Higher But Faces Key Resistance: Will The Uptrend Resume?

By Staff of ForexCycle

Tuesday, February 6, 2024 7:42 AM EDT

USDCHF has been on an upward trajectory, breaking above the resistance level of 0.8684 and reaching as high as 0.8723. Now, it faces a crucial hurdle at 0.8728. Let’s dive into the technical analysis to understand what this means for the pair’s future direction.

Uptrend Resumption or Temporary Bounce?

Breakout Achieved: USDCHF successfully surpassed the initial resistance at 0.8684, extending its rally from 0.8550.
Key Test Ahead: The pair now faces a critical resistance level at 0.8728.
Breakout Scenario: A decisive breach above 0.8728 would signal a potential resumption of the longer-term uptrend that began at 0.8332. This could pave the way for a further climb towards the 0.8800 area.
Rejection Scenario: If USDCHF encounters resistance at 0.8728 and fails to break through, it could indicate a temporary bounce within a larger consolidation pattern.

Support Levels to Watch

Initial Cushion: The initial support level to watch in case of a pullback is at 0.8665.
Breakdown Risk: A break below this level could trigger another decline, potentially retesting the previous support at 0.8550.

Overall Sentiment

The breakout above 0.8684 suggests bullish momentum for USDCHF in the near term. However, the true test lies at the 0.8728 resistance level. A confirmed breakout would strengthen the uptrend, while a rejection could lead to a consolidation or even a reversal.

More By This Author:

AUDUSD Market Analysis: Rebound And Potential Breakout
EURUSD Market Analysis: Break Above Falling Channel and Possible Rally
EURGBP Market Analysis: Downtrend Continuation And Potential Targets

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