- USD/CHF has formed a bearish H&S pattern which hints at more weakness.
- More downside will be confirmed by a break below the base of the pattern or its “neckline”.
USD/CHF has likely formed a bearish Head and Shoulders (H&S) reversal pattern on the 4-hour chart, which, if valid, indicates a probable decline is on the cards for the pair.
USD/CHF 4-hour Chart
The H&S is composed of a peak, the “head” (H) and two shoulders either side (S). A break below the neckline at the base of the pattern confirms a decline lower. The pattern is a bearish reversal sign.
On USD/CHF the neckline is at around 0.8797. The initial target for the pattern is at 0.8703, the 61.8% Fibonacci extension of the height of the pattern extrapolated lower (red line labelled 0.618 on chart).
Volume has declined during the formation of the H&S (red dashed line), further enhancing the validity of the pattern.
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