USDCHF price analysis:
- The USDCHF price is close to channel support and the 1.00 parity level; a bounce now seems possible.
- Meanwhile, retail traders are overwhelmingly short the pair and a contrarian view of crowd sentiment also suggests the outlook is bullish.
USDCHF chart positive
USDCHF is close to the lower bound of a rising channel that has been in place for the past two months and could well bounce from there. Moreover, at 1.0019 at the time of writing, it is not far from the 1.00 parity level, which is also likely to be difficult to break through.
If these supports hold, the likely targets are the February 15 high at 1.0090 and then the February 13/14 highs just under 1.01. However, to the downside, a break of trendline support could lead to a slide back to the February 10 low at 0.9985.
USDCHF Price Chart, Hourly Timeframe (December 17, 2018 – February 19, 2019)
Chart by IG (You can click on it for a larger image)
Meanwhile, traders are exceptionally short the pair – expecting it to fall. Retail trader data show that just 21.6% of traders are net-long, with the ratio of traders short to long at a remarkable 3.64 to 1. In fact, traders have remained net-short since January 17, when USDCHF traded near 0.9811; the price has moved 2.4% higher since then. The number of traders net-long is 4.9% higher than yesterday and 0.8% lower than last week, while the number of traders net-short is 20.9% higher than yesterday and 122.3% higher than last week.
At DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDCHF prices may rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USDCHF-bullish contrarian trading bias.
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--- Written by Martin Essex, Analyst and Editor