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US Dollar Bulls vs CHF in Control as Golden Cross Nears

US Dollar Bulls vs CHF in Control as Golden Cross Nears

Justin McQueen, Strategist

USD/CHF Price Analysis & News

  • USD/CHF Bulls Remain in Control
  • Golden Cross Nearing
  • USD/CHF Technicals

USD/CHF bulls remain in control for now as the pair tests 0.9400, while a large bulk of the move has stemmed from the rise in US yields, an unwind of USD/CHF short positioning shown in CFTC data has also played its part in the rise. That said, as we approach the end of Q1, month/quarter-end flows are likely to dictate the pair for the next few sessions, thus the focus will be on price action around the London 4 pm fix.

Taking a look at the technicals in the pair, USD/CHF is nearing a 50/200DMA crossover, also known as a ‘golden cross’ and more often than not tends to be a bullish signal. With this in mind, I look at a long-only strategy when a golden cross is formed in USD/CHF with the position exited as soon as the 50DMA closes below the 200DMA and compare this against a buy and hold position in the pair. The chart below (using a near 10yr lookback) shows that following a crossover strategy has yielded better returns than a buy and hold in USD/CHF. That being said, there is a drawback to this, given that a buy and hold strategy may not necessarily apply to FX, which tends to be more short-term in nature, therefore a direct comparison can be slightly misleading.

Moving Average (MA) Explained for Traders

USD/CHF Crossover vs Buy and Hold Returns

Source: Refinitiv, DailyFX

USD/CHF Technical Levels

In terms of resistance, the trendline stemming from the 2019 peak is situated at 0.9500, in which a break above opens the door to a move towards the 200WMA situated at 0.9661. On the downside, initial support is seen at 0.9330 (circa 50% fib) with 0.9220 below. It is important to note that the RSI has yet to confirm the higher highs in the spot price, which does provide a cause for caution on chasing the move higher from current levels and instead may provide an opportunity for dip buyers.

USD/CHF Daily Time Frame

Source: Refintiv

Introduction to Basic Trendline Analysis

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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