USD/CHF extended the pullback from the short-term high at 0.8041, but failed to hold cluster support below the 0.7877 area (38.2% retracement level from 0.7603 to 0.8041 at 0.7874). As the MACD for 4H crosses above the signal line, the initial bias becomes neutral first. On the downside, continued trading below the 0.7874/7 area will indicate that the rally from 0.7603 is complete, and will lead to a deeper decline to the 61.8% retracement levels at 0.7770 and below. However, secondary resistance above 0.7925 will shift the bias back to the upside for a retest of 0.8041.
In the bigger picture, a bounce from the medium term low of 0.7603 is only a correction of the drop from 0.9200. Rejection by 55 W EMA (now at 0.8081) will confirm this bearish condition, and set up resumption of downtrend to 100% forecast at 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382 at a later stage. Despite this, a sustained break of the 55 W EMA would indicate that a larger downtrend correction from 1.0146 (2022 high) is likely.
In the longer term picture, price action from 0.7065 (2011 low) is seen as a corrective pattern to the multi-decade downtrend from 1.8305 (2000 high). It is uncertain whether the drop from 1.0342 is the second stop of the pattern, or a resumption of the downtrend. But in both cases, the outlook will remain bearish as long as the 0.8756 support turns into resistance (2021 bottom). A retest of 0.7065 should be seen next.
