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Bearish Reversal Looms as Head and Shoulders Pattern Takes Shape
Central Bank
Economic
Summary:
If this historical price action is repeated, short positions would be favored from this resistance zone, targeting 0.7984, the next local support level.
Sell
TradingUSDCHF
EXP
0.80553
Entry Price
0.79850
TP
0.81150
SL
0.80878 +0.00056 +0.07%
0
Point
Flat
0.79850
TP
CLOSING
0.80553
Entry Price
0.81150
SL
The latest labor market data from the U.S. continues to signal deceleration. The ADP report indicated that U.S. private payrolls recorded a weekly average decline of 2,500 in the four weeks leading up to November 1st, a notable improvement from the steeper 11,250 average loss observed in the preceding period. Separately, August Factory Orders expanded by 1.4% month-over-month (MoM), which met consensus estimates and successfully reversed the 1.3% contraction recorded in July.
Federal Reserve Governor Christopher Waller adopted a distinctly dovish tone on Tuesday, characterizing the U.S. labor market as "weak" and "near stalling speed." He suggested that the current restrictive policy appears to be dampening economic activity and reiterated his view that a 25 basis point (bps) rate cut at the December 9-10 meeting would provide "additional assurance" for the stability of the labor market.
Adding to the complexity, President Donald Trump reversed previously imposed tariffs on over 200 consumer products, including coffee and orange juice. This decision was reportedly driven by an acknowledgment of the inflationary impact resulting from increased import costs. Despite the economic rationale, the immediate market reaction to this tariff news remained marginal.
Commentary from other Federal Reserve officials remains highly divergent. Vice Chair Philip Jefferson offered cautious, slightly dovish remarks on Monday, acknowledging growing risks to employment. Conversely, Kansas City Fed President Jeffery Schmid argued that the current policy stance is "moderately restrictive," which he deems appropriate to counter demand growth. St. Louis Fed President Alberto Musalem suggested that rates are now closer to neutral than restrictive, emphasizing the limited scope for easing without risking an overly accommodative stance.
In contrast, the Fed’s Thomas Barkin offered a more balanced evaluation, noting that "it’s hard to declare victory on either mandate" and emphasizing that inflation, while above target, is unlikely to re-accelerate. Barkin acknowledged that the labor market is weakening but argued that it may not weaken much further, adding that the job market appears "somewhat softer than the data suggests."
Meanwhile, the Swiss National Bank (SNB) continues to grapple with the headwinds of a strong Franc, weak domestic inflation, and modest economic growth. In comments made earlier this month, SNB Board Member Petra Tschudin stated that the central bank is "in a good position with the current interest rates," noting that inflation projections remain within its target range of 0-2%. She also indicated that the SNB does not currently see a case for cutting rates below zero, though such a move cannot be ruled out if conditions change.
Technical Analysis
The USD/CHF pair is displaying a significant technical formation on the candlestick chart known as a Head and Shoulders (H&S) pattern.The appearance of this pattern is a strong indication of a potential trend reversal to the downside. The price recently rallied to 0.8076, a level previously touched on October 9th. On that prior occasion, the price reacted sharply downward from this exact point. If this historical price action is repeated, short positions would be favored from this resistance zone, targeting 0.7984, the next local support level. This target zone is particularly critical as it aligns closely with the 0.618 and 0.50% Fibonacci retracement levels, which often act as magnet targets for significant market pullbacks.
Furthermore, the Relative Strength Index (RSI) has reached a high of 72.97, moving clearly into overbought territory. This extreme reading suggests that bullish momentum is exhausted and could invite bears to take control of the next price movement. The 100-period and 200-period Moving Averages (MAs) are situated at 0.8022 and 0.7998, respectively. These levels sit near the midpoint of the price's recent range since early October, making them a natural magnet for the price toward the primary support zone. Conversely, a strong move above the current local high would invalidate the bearish H&S setup and open the door for a renewed move to the upside.
Trading Recommendations
Trading direction: Sell
Entry price: 0.8053
Target price: 0.7985
Stop loss: 0.8115
Validity: Dec 03, 2025 15:00:00
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