USD/CHF Technical Analysis: Up-side Capped by Trend-Line

To receive James Stanley’s analysis directly via email, please SIGN UP HERE

Talking Points:

• USD/CHF Technical Strategy: Flat
• USD/CHF has run into trend-line resistance on the top-side of the symmetrical wedge discussed in our last piece.
• USD/CHF continues to remain confined within previously-established Support and Resistance levels as outlined below.

In our last article, we examined the recent resistance being tagged in USD/CHF as the pair threatened to break above a down-ward sloping trend-line that made up the top-side of a symmetrical wedge congestion formation. Since that article, prices staged a quick break of Fibonacci resistance at .9781, only to be thwarted by the longer-running trend-line. We’ve seen price action react off of this trend-line to move down to prior support at the .9681 zone, which had provided numerous instances of support and resistance over the prior three months.

The current posture in USD/CHF is congested; with a hint towards a bullish-breakout should the down-ward sloping trend-line clear. This trend-line currently projects at .9825, and should this level give way, then traders can look to buy support with targets cast towards .9900 (minor psychological level and the six-month-high in the pair), and then parity (major psychological level).

The long side may also be conducive to a shorter-term, range-based type of strategy by looking to the .9681 support level. This is the 50% Fibonacci retracement of the ‘big picture’ move in USD/CHF, taking the 2008 high to the 2011 low. Traders could look to place stops below this support with targets at .9748 (76.4% Fib retracement of the most recent major move, taking the August high to the August low), .9781 (76.4% Fib retracement of the ‘secondary move’ taking the 2015 high to the 2015 low), and then .9825 (projected trend-line resistance).

The short-side of USD/CHF could look more attractive for intermediate-to-longer-term plays with the persistent resistance being seen from .9780-.9900 over the past six months. For this longer-term idea, traders would likely need to focus on targets below .9600 to offset the wider stop values. Potential support at .9577 (50% Fib retracement of the most recent major move), and then .9500 could prove attractive, as this is a confluent level of support (major psychological level, 61.8% of the secondary move and 38.2% of the most recent major move). Should .9500 clear, .9400 becomes a level of interest (23.6% of the most recent major move), and then .9350 comes in focus (projected support trend-line).