USD/CHF consolidates near new local highs, formed yesterday. The pair is trading within the upward channel between 26 May high and 22 June low.
Moreover, the price is approaching not only the upper border of the channel but also the upper border of a probable "wedge" what indicates that the pair is likely to face strong resistance at 0.9860-0.9900.
The "head and shoulders" pattern is trying to form on the 4-hour chart, thus, indicating that downward dynamics is likely to develop in the short term.
Support and resistance
Bollinger Bands on the daily chart keeps growing. The price range is widening, but, currently, the pair growth is so intense that the indicator is lagging. Thus, the price left the upper border of the range, and a sell signal was formed.
MACD is going to turn; however, there is no clear sell signal yet.
Stochastic is in the overbought area and is moving sideways. The dynamics indicates that the USD should be overbought in the short and very short term and a downward correction should form in the coming days.
Support level: 0.9769, 0.9717 (near30 July local high), 0.9649 (21 July strong resistance), 0.9597, 0.9559.
Resistance levels: 0.9800 (the nearest mark), 0.9820 (5 August local high and the probable "head" of the "head and shoulders" pattern), 0.9862 (13 April high).
Open long positions when 0.9820 is broken through 9with appropriate indicators signals). It is worth noting that this trading scenario should not be considered as the main one because the pair is trading near 2-months highs.
A correction pullback is more likely to happen when 0.9769 (near the right "shoulder" of the "head and shoulders" pattern on the 4-hour chart) is broken through. Set take-profit at 0.9649 and stop-loss at 0.9820.