USD/CHF trades in the 0.8930s on Friday, after rising on the back of positive US Purchasing Manager Index (PMI) data, which showed a healthy expansion in the manufacturing and services sectors in June.
The direction of the short-term trend is unclear. Recent gains have brought into question the dominance of the down trend since the pair broke out of the rising channel it was in at the beginning of the year.
Thursday’s rally off the 0.8827 lows was strong, indicating it could be the start of a reversal. The Relative Strength Index (RSI) exited oversold at the same time and rose up equally steeply, showing strong upside momentum, and further supporting a bullish reversal hypothesis.
USD/CHF has broken above the last lower higher of the prior downtrend at 0.8932 (June 17 high), the 50 Simple Moving Average (SMA) and the green down-trend line, adding further evidence a new uptrend might be evolving.
It could be argued USD/CHF is now in a very young short-term uptrend which, going by the saying “the trend is your friend”, is more likely than not to extend. However, for stronger confirmation it would need to break above major support and resistance at 0.8989.