Uptrend in doubt as bad omens make an appearance

• USD/CHF has broken below a key level bringing the uptrend into doubt. 
• Other band omens are also appearing suggesting the possibility of a bearish shift in the trend.

USD/CHF is at risk of tipping into a downtrend and reversing its short and medium-term bull trend, as it extends its pullback below a key level. Other “bad omens” also make their appearance on the price chart, suggesting a risk of more downside. 

USD/CHF Daily Chart 

USD/CHF has found support at the (green) 200-day Simple Moving Average (SMA) at 0.8822 and although it could still mount a recovery from its current level and thereby rescue the uptrend, the evidence is building for a possible reversal and start of new downtrend. Given “the trend is your friend” such a reversal would suggest a bearish bias then dominating.

The pair has broken below the key 0.8801 November 9 swing low and although it failed to close below the level, the breach is still a bearish indication. 

The pair formed a Two-Bar reversal pattern (red rectangle on chart) at the November 22 and 23 highs which is bearish. This happens when a long green candle that reaches a peak is followed by a long red candle of a similar size. It is a sign of a reversal in sentiment and a signal of more downside to follow.

The Relative Strength Index (RSI) momentum indicator has formed a Double Top pattern (red ellipse) which is bearish for momentum and consequently also price. 

A break below the 0.8797 November 27 low would confirm a change in the short-term trend and more downside to targets at 0.8748 (August 14 high), and 0.8615 (November 4 low). 

That said, if price remains above the November 27 low and recovers, it could signal a resumption of the uptrend. 

If so, a break above the 0.8958 November 22 high would probably confirm a continuation up to the next target at 0.9000 (round number and psychological area), followed by 0.9050 (July 2 swing high).