USD/CHF Price Analysis: Odds of a bearish reversal soar as bears challenge 200-EMA

• Signs of a bearish reversal escalate as asset challenges the 200-EMA.
• An initiative selling structure near 200-EMA adds to the downside filters.
• The RSI (14) has not turned bearish yet and is indicating a consolidation ahead.

The USD/CHF pair has turned sideways after displaying wild moves on Monday.  The asset is facing barricades around 0.9780 and is expected to remain sideways until the volatility cools off. Broadly, the asset witnessed a steep fall after failing to reach the crucial resistance of 0.9900.

The formation of the Double Top chart-pattern after failing to sustain above Tuesday’s high at 0.9859 signaled a strong bearish reversal. Usually, the above-mentioned chart pattern indicates lower buying interest at elevated levels. Also, the formation of a selling tail near elevated levels has strengthened the odds of a bearish reversal.

The asset is forming an initiative selling structure after a double top formation, which indicates the entry of those investors who initiate shorts after the establishment of a bearish bias. The major is forming the initiative structure near the boundary of the 200-Exponential Moving Average (EMA) at 0.9767, which indicates that the market participants are respecting the critical EMA.

However, the Relative Strength Index (RSI) (14) has shifted into a range of 40.00-60.00, which signals a consolidation ahead.

A decisive downside below July 13 low at 0.9758 will drag the asset towards July 5 high at 0.9705. A breach of the latter will expose the asset to more downside towards July 1 high at 0.9642.

Alternatively, the greenback bulls could defend the double top formation after violation of Wednesday’s high at 0.9827. This will drive the asset towards Thursday’s high at 0.9886, followed by psychological resistance at 1.0000.

USD/CHF hourly chart