USDCHF volatile, forming inverted head n shoulders pattern

28/01/2021

It looks like the USD has bottomed in many pairs, but at the same time, it struggles to build any bullish momentum. The USDCHF pair erased all daily gains and was trading flattish after the US GDP data. 

There is a very nice inverted head and shoulders pattern, as shown on the chart. The neckline of this formation is near 0.8920, and if the greenback rises above that level, it could be a powerful bullish signal. 

The formation's potential is circa 150 pips, thus targeting 0.91 - the middle of the previous consolidation range. 

On the other hand, the key support seems to be near 0.8840, and if the price drops below that zone, the head and shoulders pattern would be invalidated, with the next target for bears near the current cycle lows of 0.8760.

The overall fundamental situation remains heavily bearish, but the greenback is the most oversold in ten years, which could lead to a short-squeeze rally. 
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