Selling into the USD/CHF Rally?

The rally in the USD/CHF has pushed the short-term intraday time frames into an uptrend to begin the week. The question is how much longer can be bullish momentum last?

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The downtrend on the 240-minute chart is strong and confirmed by a ten-bar Autochartist Initial Trend reading. The Channel Down formation would then be more likely to set up either an
Retracement/Correction or Continuation of the Trend entry. Both would capitalize on the downtrend moving lower from current levels. The R/C would trigger a short-sell at current levels relying on resistance around the 1.0400 to 1.0405 area (E). The low three-bar Breakout reading suggests that there was low bullish momentum behind the move higher and subsequent pattern reversal. In order to better set up the reversal of a pattern and strong trend, a much higher Breakout reading would have offered more confirmation.

If however prices to trigger a reversal, look for buying support above the downtrend line resistance at 1.0410. The reason for this is the confirmed strength of the downtrend and the likelihood for selling into the rally and the whole, round 1.0400 level. Consider that this longer-term, intraday bounce is occurring in an overall (daily) downtrend so the sentiment is still very bearish despite the Monday session rally.

For aggressive traders willing to buy the Channel Down downtrend line break, be sure to watch for selling pressure at both the 50 period simple moving average at 1.0418 and the 200 period simple moving average at 1.0475.