• USDCHF stabilizes around 0.8750 after a strong sell-off

• Records a 4-month low but fails to test the early July lows

• Momentum indicators point to rising bullish pressure

USDCHF is trading sideways today, a tad below the 0.8757 level, as the bulls are trying to regain market control after a very strong sell-off from the October 3 high of 0.9243. The most recent, less volatile, sessions show a degree of indecisiveness from market participants ahead of key market events. However, the convergence of the 50, 100- and 200-day simple moving averages (SMAs) is potentially opening the door to a strong move occurring soon.

In the meantime, the momentum indicators are not shy of revealing their bullish tendencies. More specifically, the Average Directional Movement Index (ADX) is edging lower and signaling a possible trend reversal in USDCHF. Additionally, the RSI is moving higher, towards its 50-midpoint. More importantly, the stochastic oscillator appears ready to exit its oversold territory. Should this move take place, it would be perceived as a strong bullish signal.

Should the bulls gain confidence, they could try to clear the January 6, 2021 low and May 4, 2023 low at 0.8757 and 0.8819 respectively. They could then come across the very busy 0.8903-0.8946 range. This is populated by the 50-, 100- and 200-day SMAs, the February 24, 2012 low and the 23.6% Fibonacci retracement of the October 21, 2022 – July 27, 2023 downtrend, and appears to be crucial for the next leg in USDCHF.

On the other hand, the bears are keen to keep their hard-earned gains and will try to push USDCHF below both the 0.8757 and 0.8699 levels. If successful, they could have a go at testing the support set by the October 27, 2011 and July 27, 2023 lows at the 0.8552-0.8569 region, and subsequently be given a chance to record a new multi-year low.

To sum up, with USDCHF volatility dropping in the past sessions, the bulls are trying to regain the upper hand with the support of the momentum indicators.