USD/CHF Technical Analysis: Resistance Breaking, Is the Range Still Alive?

2016-11-16 18:51:00

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Talking Points:

USD/CHF Technical Strategy: Rampant USD-strength driving pair above resistance, towards 8-month highs and testing the 6+ month range.
Despite the fact that the U.S. Dollar is running up to 13-year highs, USD/CHF remains below 8-month highs; and this highlights the attractiveness of short USD/CHF in USD-weakness scenarios.
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In our last article, we looked at the vigorous bounce off of support in USD/CHF on the night of the U.S. Presidential Election. After the pair had spent much of the prior six months in a range caught between .9500-.9950, this merely meant that the bullish side of the setup would likely be unapproachable while traders waited for resistance with the aim of trading the range back down towards support.

But since that last article, strength in the U.S. Dollar hasn’t calmed. The Dollar just set a fresh 13-year high earlier today, and in a world where most Central Banks are still ramping-up dovishness for their economies and currencies, continued gains in the Greenback can be seen until the Federal Reserve tempers this excitement of USD-strength. How that may happen, or when that may happen could be considerable guesswork, but traders should not expect that this Dollar strength is going unnoticed by the bank.

With the U.S. Dollar setting fresh 13-year highs, USD/CHF has merely rallied up towards resistance levels from March. This highlights the fact that while the Greenback has been rampantly strong, the Swiss Franc hasn’t been as weak as many other currencies. This also highlights the fact that, should that USD strength subside, USD/CHF may be an operable area to look for that short-USD exposure.

Traders looking for short-USD exposure can continue to strategize around the bearish position while price action in USD/CHF remains subdued below the March high of 1.0092. Should this high get taken out, the technical picture gets considerably messier as the next swing-high is more than 150-pips higher on the chart.