USD/CHF Technical Analysis – Resistance Now Above 0.90
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- USD/CHF Technical Strategy: Flat
- Support:0.8952-56 (Apr 4 high, 100% Fib exp.), 0.8896 (76.4% Fib exp.)
- Resistance: 0.9016 (123.6% Fib exp.), 0.9053 (138.2% Fib exp.)
The US Dollar moved higher as expected against the Swiss Franc after prices produced a bullish Piercing Line candlestick pattern. A break above resistance in the 0.8952-56 area – the 100% Fibonacci expansion and the April 4 high – has cleared the way for a challenge of the 123.6% level at 0.9016. A daily close above that exposes the 138.2% Fib at 0.9053. A reversal back below 0.8952 aims for the 76.4% Fibat 0.8896.
While a long a position seems workable from a risk/reward perspective, we will tactically opt not to pursue it. The inverse correlation between USDCHF and EURUSD is now 0.92 on 20-day percent change studies, and we already have a short EURUSD position. Adding a long USDCHF trade here would in effect double our existing exposure, so we will continue to stand aside.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.