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Oversold RSI and Key Fibonacci Confluence Point to a Bullish Bounce
Central Bank
Economic
Summary:
The Relative Strength Index (RSI) has plunged to the 25 level, signaling extreme oversold conditions that typically attract value buyers.
Buy
TradingUSDCHF
EXP
0.78735
Entry Price
0.79830
TP
0.78300
SL
0.78887 -0.00033 -0.04%
0
Point
Flat
0.78300
SL
CLOSING
0.78735
Entry Price
0.79830
TP
The U.S. Bureau of Economic Analysis reported that the economy expanded at a robust annualized rate of 4.3% in the third quarter. This figure significantly outperformed market expectations of 3.3% and surpassed the previous estimate of 3.8%. Accompanying this growth, inflation metrics within the Gross Domestic Product (GDP) report remained firm: the GDP Price Index rose by 3.7%, while Personal Consumption Expenditures (PCE) increased by 2.9%, with PCE Prices climbing 2.8%.
Despite strong growth, the manufacturing sector showed signs of cooling. Durable Goods Orders fell by 2.2% in October, reversing a prior gain of 0.7%. Orders excluding defense dropped by 1.5%, and while orders excluding transportation saw a marginal 0.2% increase, overall Industrial Production slipped by 0.1% month-over-month.
The divergence among Federal Reserve officials continues to shape market sentiment. Fed Governor Stephen Miran remarked on Monday that recent data should steer policy in a more "dovish direction," warning that failing to ease policy could heighten recessionary risks. Conversely, Cleveland Fed President Beth Hammack told The Wall Street Journal on Sunday that she sees no immediate need for rate cuts, citing persistent inflationary threats and suggesting that rates could hold within the 3.50%–3.75% range through the spring. Adding to the debate, National Economic Council Director Kevin Hassett noted on Tuesday that the Fed is moving too slowly in reducing rates despite evidence of faster-than-expected economic growth.
In Switzerland, the Swiss National Bank (SNB) reiterated its unchanged policy stance. In its Q4 Quarterly Bulletin, the institution confirmed it maintained its policy rate at 0%, viewing medium-term inflationary pressures as largely contained. The SNB considers the current setting appropriate to support economic activity while ensuring price stability. This assessment aligns with the latest Swiss ZEW Survey for December, which fell to 6.2 from 12.2. While this decline in sentiment points to a more cautious economic outlook, it is not deemed severe enough to force the central bank into immediate monetary tightening.
Technical Analysis
The USD/CHF pair is currently testing a pivotal support level at 0.7874, a zone that has successfully triggered bullish rebounds on three separate occasions. Specifically, the price found firm buyers at this level on October 16th and November 14th. The failure of the bears to decisively break this floor increases the statistical probability of a bullish recovery from this region.
Technical indicators further support a potential reversal. The Relative Strength Index (RSI) has plunged to the 25 level, signaling extreme oversold conditions that typically attract value buyers. On the upside, the 100 and 200-period Moving Averages (MAs) are positioned at 0.7985 and 0.8004, respectively. These averages are converging near a critical resistance level at 0.7983.
This area is of particular interest as it represents a massive confluence zone, housing both the 0.50 and 0.618 Fibonacci retracement levels.
This cluster of technical indicators is expected to act as a significant "price magnet," drawing any potential bullish impulse toward the 0.7983 target. However, a decisive close below the 0.7874 support would invalidate this bullish setup and open the door for a deeper correction.
Trading Recommendations
Trading direction: Buy
Entry price: 0.7873
Target price: 0.7983
Stop loss: 0.7830
Validity: Dec 31, 2025 15:00:00
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