USD/CHF: Looks downside to 0.9200 on H&S formation

• The Swiss franc bulls are likely to drive the asset lower on head and shoulder formation.
• The bearish range shift in the RSI (14) adds to the downside filters.
• The 200-period EMA will act as a major barricade going forward.

The USD/CHF pair has rallied after a flat opening near Friday’s low at 0.9414. The major has witnessed an intensified sell-off after hitting a fresh 11-month high at 0.9460 on March 16.

On an hourly scale, USD/CHF has been slipped after a head and shoulder formation, which signals a bearish reversal. Usually, a head and shoulder formation denote a sustained inventory distribution from institutional investors to retail participants. The greenback bulls are likely to test the neckline which is placed from March 11’s average traded price at 0.9321, adjoining the March 14 low at a similar figure and March 18’s average traded price at 0.9333.

The spot has slipped below the 200-period period Exponential Moving Average (EMA), which is trading at 0.9342. Moreover, the latter will act as a major barricade for the pair.

The Relative Strength Index (RSI) (14) has slipped from a consolidation range of 40.00-60.00 to a bearish range of 20.00-40.00, which adds to the downside filter.

For more downside, a pullback near the neckline at 0.9333 will bring fresh offers from the market participants, which will send the pair lower to February 24 high at 0.9289, followed by a round level at 0.9200.

On the flip side, bulls can take the charge if the asset surpasses March 18 high at 0.9383, which will drive the pair towards March 16 high and 11-month high at 0.9418 and 0.9460 respectively.

USD/CHF hourly chart