In today’s technical analysis, let’s take a look at a more exotic currency pair—Australian Dollar to Swiss Franc (AUD/CHF)—where a potentially significant setup is unfolding.
This pair has been locked in a clear long-term downtrend, forming consistent lower highs and lower lows. Recently, however, we’ve seen a consolidation phase, developing into a wedge pattern outlined by two converging black trendlines. Technically speaking, a wedge within a downtrend often acts as a continuation pattern, signaling the potential for another bearish leg.
This week, the price briefly broke below the lower boundary of the wedge, suggesting a potential sell signal. However, that breakout didn’t hold. The price quickly climbed back above the trendline, raising the possibility of a false breakout, highlighted here with a red marker. These kinds of traps can often lead to short-term rallies if confirmed.
At this point, all eyes should be on how the week closes. If the price holds above the lower boundary of the wedge, it may open the door for a corrective move higher or even a breakout to the upside. But if the price closes the week back below the wedge support, that would confirm the false breakout as just noise—and solidify a bearish continuation pattern with a fresh signal to sell.
This setup is still developing, but it’s certainly one worth watching closely.