USD/CHF rally losing momentum; could weaken further in short-term.
USD/CHF has recorded a stunning bullish rally over the last six weeks, creating a new one-year high of 1.0055. However, despite the gains, the pair is this week developing with weaker momentum than before and the technical indicators suggest that the market could ease a little bit in the short-term.
The RSI indicator is currently flattening in the overbought levels and if there is an exit from this region, this would provide a negative signal. In addition, the stochastic oscillator is falling above the 80 level, while the %K line posted a bearish cross with the %D line.
Should the market create losses, immediate support could be met at 0.9975. A significant leg below this area could send prices towards the 20-day simple moving average (SMA) which is currently fluctuating around 0.9811. Then, if the market fails to hold above this level, the next stop could be at the 0.9650 support barrier, which stands slightly below the 40-day SMA.
However, if the market manages to pick up speed again, the 1.01 level could offer nearby resistance. A potential upside violation of this area would open the way towards 1.0170, raising the likelihood of more advances.
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