USDCHF failed in its last two attempts to break past the 1.0000  barrier, creating a double top with the neckline at the .9600 mark on its 4-hour time frame.

The pair has yet to test and break below the neckline to confirm that a reversal from the uptrend is underway. If that happens, USDCHF could be in for a drop that’s the same height as the chart pattern or 400 pips.

The 100 SMA already crossed below the 200 SMA to indicate that the path of least resistance is to the downside or that support is more likely to break than to hold. Price is also moving below both indicators as an early signal of bearish pressure.

Stochastic is indicating oversold conditions, though, so sellers might be taking a break and allowing buyers to return from here. In that case, the neckline support might hold and take USDCHF back for another test of parity.

RSI is also pulling higher without reaching the oversold area, hinting that buyers are eager to return.

The Swiss franc got a huge boost last week when the SNB surprised with a 0.25% interest rate hike. The Swiss central bank rarely makes any monetary policy adjustments, so when they do the moves tend to generate large reactions.

The monetary policy tightening move was likely due to stronger inflationary pressures in the country, so acting to keep these in check suggests that the central bank is no longer bent on keeping the currency weak.

Just keep in mind that the Fed also hiked interest rates by a larger than expected 0.75% and might follow this up with more tightening moves in their next meetings. Fed head Powell has a couple of speeches due this week, so he might be asked on what the central bank’s next plans are.