USDCHF confirms the sell signal from last week

Monday is not starting on a very joyful note for the American Dollar. The USD is currently one of the weakest currencies and our hero of today – USDCHF is one of the weakest pairs among majors at the moment, losing -0.35%. This drop is not a random occurrence as it happens in an important place and actually gives us a crucial, long-term sell signal.

In the second half of November and first few days of December, USDCHF was testing a key support. Actually, two supports – a horizontal one on the 0.937 (yellow) and a dynamic one (long-term up trendline (black)). The horizontal one has been here since the end of September 2021 and the dynamic one since the beginning of 2021.

The end of last week brought a breakout of the two supports and Monday brings a confirmation of this negative sentiment. Buyers vanished and demand is pretty much gone at this stage. A potential target for the current move is the horizontal support on the 0.909 (green) – chances that we will get there are pretty high.

The opposite scenario is the USDCHF coming back above the 0.937 but the probability of that to happen is pretty low. This week, however, we shall receive the rate decision from both Switzerland and US, which means that anything could happen. Stay safe when trading this pair as the volatility may increase significantly.