USD/CHF Technical Analysis: Swissy Sticking with the Channel

2016-07-20 18:44:00 James Stanley

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Talking Points:

USD/CHF Technical Strategy: Bullish near-term price action structure continues to build.
As the US Dollar continues to trade within a range, CHF may remain as an attractive candidate to voice long-USD themes.
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In our last article, we looked at the continued bullish structure showing in USD/CHF, with a warning about the longer-term, bigger picture wedge in the pair (shown below).

Created with Marketscope/Trading Station II; prepared by James Stanley

And given the amount of resistance at the projection on the top-side of that wedge, with two different Fibonacci retracement levels within a few pips of that price, traders would likely want to cap top-end profit targets around this region.

But the reasons for bullish continuation in USD/CHF continue to be attractive, with the US Dollar printing fresh near-term highs as we approach the Federal Reserve meeting next week. And while no hike is expected at next week’s meeting, the fact that U.S. equities remain at all-time highs means that, at the very least, we’ll likely hear the bank talk up the prospect of a rate hike in the second half of this year (perhaps even two, which would be very bullish USD). Combine this with the fact that the Swiss National Bank is on-guard against excessive Franc strength, and this could provide for continuation of the top-side move.

On a shorter-term basis, the channel that we discussed last week in USD/CHF remains alive and well. The support level we had mentioned just above .9750 offered yet another inflection before the top-side move had resumed. At this stage, traders can look for support in the .9850 region in the effort of continuation. For traders wanting to tread a bit more conservatively, deeper support could be sought out in the region around .9800, as this is the 76.4% retracement of the prior major move.