With rising crude oil prices seemingly outweighing risk-off flows for the Loonie, CAD/CHF managed to break above its falling trend line on the 4-hour chart.
Can the reversal gain traction from here?
Check out these potential support zones marked by the Fibonacci tool!
CAD/CHF 4-hour Forex – Chart Faster with TradingView
It has almost been a whole week since US-Iran tensions flared, triggering a steady run higher for crude oil prices and the correlated Loonie on prolonged production and shipment concerns.
After all, the shutdown of the Strait of Hormuz means that roughly 20 million barrels of oil are stuck around the chokepoint each day, and that major economies could scramble to secure their own supplies.
Meanwhile, the Swiss franc is struggling to take advantage of safe-haven flows since the SNB recently emphasized that they are willing to step in the currency market to keep rallies in check.
Does this mean further upside for CAD/CHF?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the Canadian dollar and the Swiss franc, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The pair has been consolidating after its trend line breakout, forming what appears to be a bullish flag pattern that could be indicative of another leg higher.
Keep your eyes peeled for long green candlesticks closing above the latest highs near R4 (.5740) since these could point to a rally of the same height as the flag’s mast.
Profit-taking could trigger a larger dip for CAD/CHF though, potentially taking price down to the Fib levels near areas of interest. The 38.2% level is around R2 (.5690) while the 50% Fib is right in the middle of a former resistance zone that could hold as support. A larger correction could reach the 61.8% level in line with R1 (.5670) and the moving averages.
Note that the gap between the 100 SMA and 200 SMA is narrowing to suggest a potential bullish crossover soon.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Promoted: The Analysis & Strategy are only half the Battle; Your Mindset is the Rest.
Today’s chart art zooms in on CAD/CHF’s reversal. But as any pro will tell you, even the cleanest trend-following setup can fall apart if the trader doesn’t stay disciplined when price starts testing the level.
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Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
