USDCHF: With a failure to build on its two weeks of corrective strength seeing it selling off and closing lower the past week, risk of further declines is now building up. In such a case, its 2011 low at 0.8897 will be targeted with a decisive violation of that level resuming its long term downtrend towards the 0.8800 level and then the 0.8700 level, all representing its psycho levels. Its weekly RSI is bearish and pointing lower supporting this view.
Alternatively, a break and hold above the 0.9340 level will have to occur to reverse its current bear pressure and open up further upside risk towards the 0.9368 level, its Mar 09’2011 high. Further out, resistance resides at the 0.9503 level where we expect a cap to occur and turn the pair lower again. All in all, USDCHF could be preparing to resume its long term downtrend having ended its corrective recovery at 0.9340 level.