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USD/CHF Technical Analysis: Digesting Gains at Monthly High

USD/CHF Technical Analysis: Digesting Gains at Monthly High

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • USD/CHF Technical Strategy: Flat
  • US Dollar Digesting Gains After Hitting Monthly High vs. Swiss Franc
  • Narrow Trading Range Argues Against Trade on Risk/Reward Grounds

The US Dollar is consolidating below the 0.98 figure after rising to the highest level in a month against the Swiss Franc. Prices launched a swift recovery two weeks ago after testing trend line support underpinning the trend higher since early May.

Near-term resistance is at 0.9784, the 50% Fibonacci expansion. A break above this barrier on a daily closing basis clears the way for a challenge of the 61.8% level at 0.9835. Alternatively, a turn below the 38.2% Fib at 0.9733 opens the door for a test of the 23.6% expansion at 0.9670.

The available trading range amounts to a mere 51 pips, as compared with a 20-day ATR reading at 105 pips. That means prices are wedged too closely between near-term support and resistance to justify taking a trade on either the log or the short side from a risk/reward perspective (considering our strategy calls for a stop-loss activated on a daily closing basis). With that in mind, we will remain flat for now.

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