USDCHF Price Analysis: Bulls hopeful on Harami Cross formation

• The downside momentum could get pause due to Harami Cross formation near the long-term trendline.
• Risk impulse has turned quiet which has shifted the DXY into the rangebound territory.
• Contrary to candlestick formation, a bearish range shift by the RSI (14) indicates more weakness ahead.

The USDCHF pair has attempted a pullback move after testing the previous week’s low around 0.9414 in the late New York session. The asset is displaying rangebound moves as the US dollar index (DXY) has turned sideways on a relatively quiet market mood.

The upside in the DXY has been capped due to lower chances for the continuation of 75 basis points (bps) rate hike by the Federal Reserve (Fed), while the downside is restricted due to anxiety ahead of the US midterm elections outcome. S&P500 futures have rebounded in Tokyo after a bearish Monday, which might bring the risk-on mood back into traction.

On a daily scale, the asset has displayed a perpendicular fall after failing to sustain above the critical resistance of 1.0100. The major has dropped sharply to near the upward-sloping trendline placed from the 6 January 2021 low at 0.8758.

A sheer decline in the pair has turned the 50-and 200-period Exponential Moving Averages (EMAs) at 0.9830 and 0.9645 respectively towards the downside. This indicates that the short- and long-term trend is bearish now.

Adding to that, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00 for the first time in 15 months, which indicates more weakness ahead.

On Monday, the asset formed a Harami Cross candlestick pattern that indicates a pause in the downside direction. A broad market profile could either be a continuation of the downside momentum or a reversal due to a loss in the downside momentum. Investors need to perform actively at this stage as it could be a make-or-a-break situation ahead.

Should the asset drop below Friday’s low around 0.9400, the Swiss franc bulls will drag the pair towards January 31 high at 0.9343, followed by March 31 low around 0.9200.

On the flip side, a break above the psychological resistance of 0.9500 will drive the asset toward the 200-EMA at 0.9645. A breach above the 200-EMA will send the asset toward the round-level resistance at 0.9700.