USD/CHF Technical Analysis: Vigorous Bounce Off of Support

2016-11-09 19:15:00

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Talking Points:

USD/CHF Technical Strategy: Still range-bound, recent revisit of Support saw a strong and vigorous bounce.
Price action had previously sold off after running into resistance at .9949, but after bouncing off of a support zone last night, shorts may be favored if resistance can come back-in to Swissy.
Recent analyst pick cleared third and final target at .9600.
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In our last article, we looked at another iteration of the range trade in USD/CHF after price action had found resistance at a familiar level around .9949. This is the 61.8% Fibonacci retracement of the 2010-2011 move and, perhaps more importantly, had functioned as swing-high resistance in both May and July, just ahead of sell-offs that ran for at least 400 pips.

So, when price action moved back to resistance last week, producing a pin bar around that well-traveled level at .9949 the door was opened for a short position. Volatility around last night’s U.S. Presidential Elections saw a brutal sell-off in the Dollar that brought prices in Swissy all the way down to the zone of support we’ve been watching around .9550-.9600. This was met with a quick and violent reaction of USD strength, eliminating the possibility of a long, support-side setup given that price action has already ratcheted higher by more than 280 pips.

Resistance, however, could still very much be in order should price action in Swissy run-higher to find another inflection between .9950-1.0000. And given the veracity of US Dollar strength at the moment, this could be a very possible scenario in the coming days. Outside of that, traders would likely want to move forward in short-term setups with a great deal of caution, as the longer-term range appears to still very much be in order, and denominating shorter-term price action in the pair.