USD/CHF dropped sharply to as low as 1.0257 last week and the break of 1.0330 support indicates that whole fall from 1.1729 is still in progress and has resumed. Initial bias remains on the downside this week for further decline to lower trend line support (now at 1.0034). But we'd anticipate strong support at around parity to contain downside, at least initially. On the upside, break of 1.0463 will in turn argue that a short term bottom is formed and turn focus to 1.0624/39 resistance zone for confirmation.

In the bigger picture, USD/CHF is possibly in the process of forming a medium term sideway pattern that started at the long term bottom of 0.9634 (2008 low). The pair will continue to stay in converging range of 0.9634/1.2296 for a while. A break of either 0.9916 support or 1.1729 resistance is needed to indicate that USD/CHF is back into a directional trend. Otherwise, medium term outlook will remain neutral.

In the longer term picture, a long term bottom is no doubt in place at 0.9634 with bullish convergence condition in monthly MACD. But the current outlook is rather unclear. Firstly, USD/CHF is staying in convergence range of 0.9634/1.2296. Secondly USD/CHF lacks sustained buying to send it through 55 months EMA (now at 1.1394) decisively yet. We'd stay neutral first until a break out from the current medium term range.

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