The USDCHF sliced through its supporting trendline today before rallying back to the line and testing the former support line as resistance. Staying below the spike high at 1.2187 warrants a cautious short term bearish view. Cautious is emphasized because the rally off of the low looks impulsive and the longer term structure is bullish above 1.2027.
The 240 chart below shows the double zigzag from 1.2571 along with the preceding 5 wave rally from 1.1877 to 1.2571. As long as 1.2027 holds, the structure is bullish. A rally through 1.2281 would signal that the next rally leg is underway.
This is a daily chart with the risk reversal rate (1 month 25 delta) below (red line is 10 day average). Not only is this a possible major inverse head and shoulders reversal but the RR rate is in the same area that it was when the USDCHF put in lows of 1.1920 and 1.1877 in May 2006 and December 2006.