USD/CHF Price Analysis: Inverted Flag advocates a bearish momentum

An Inverted Flag formation is strengthening the Swiss franc bulls.
The 50-period EMA is acting as a major resistance for the counter.
The RSI (14) has shifted into a 40.00-60.0 range which awaits a potential trigger for volatility expansion.

The USD/CHF pair is oscillating in a narrow range of 0.9650-0.9672 in the Asian session. On a broader note, the asset is oscillating in a 0.9623-0.9732 range from the past four trading sessions after delivering a vertical downside move from a high of 1.0050 recorded last week after the Swiss National Bank (SNB) elevated its interest rates for the first time in the past 15 years. The SNB dictated a 50 basis point (bps) interest rate hike.

The formation of an Inverted Flag chart pattern is indicating more downside after the violation of the inventory re-distribution phase. An inventory re-distribution phase denotes the placement of shorts from those market participants, which prefer to enter a bearish auction after the establishment of a downside bias.

The Swiss franc bulls have defended the 50-period Exponential Moving Average (EMA) at 0.9683. Also, the 200-period EMA is trading above the asset prices at 0.9750, which weakens the greenback bulls.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which supports a consolidation ahead. A downside move below Friday’s low at 0.9619 will drag the asset towards May 27 low at 0.9545, followed by March 16 high at 0.9460.

On the flip side, the greenback bulls could regain control if the major overstep Friday’s high at 0.9733, which will send the asset towards June 9 high at 0.9817. A breach of the latter will drive the asset towards June 14 low at 0.9874.