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USD/CHF Technical Analysis: The Barriers of Resistance

USD/CHF Technical Analysis: The Barriers of Resistance

James Stanley, Senior Strategist

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Talking Points:

  • USD/CHF Technical Strategy: Swissy unable to break resistance around 1.0178 after a bullish first half of November.
  • Dollar-strength has kept USD/CHF price action elevated; but should USD-strength reverse, USD/CHF could be one of the more attractive venues to look for that theme around a bearish U.S. Dollar.
  • If you’re looking for trading ideas, check out our Trading Guides.

In our last article, we looked at imposing area of resistance in USD/CHF around the 1.0178-level. As we had written, with the U.S. Dollar continuing to run-higher while USD/CHF was continually thwarted at resistance, traders would likely want to look elsewhere to voice USD-strength themes. The level at 1.0178 is the 50% Fibonacci retracement of the 2005-2011 major move in USD/CHF, as well as functioning as the January 2015 swing-high in the pair.

Since our last article, we’ve seen even more tests of this resistance level at 1.0178. Seven of the past 11 days have seen a visit to this level, and in each case sellers came-in and pushed prices lower. And, at least initially, these pushes lower didn’t go very far, buyers came-in relatively quickly. But over the past three days, those buyers have become more and more sparse; indicating that continued support for the move-higher is beginning to wane.

Traders would likely want to approach any setups in Swissy here with a great deal of caution. Should price action move down to find support at the parity-figure, a top-side continuation setup could be sought out. Traders looking at this setup would likely want to appropriate some element of support from the prior swing-high around .9950, which had helped to set range resistance for a large portion of this summer.

For those looking at bearish approaches, the primary challenge would be fading USD-strength as we move closer to a FOMC decision where it’s largely assumed that the bank will be hiking rates. Traders looking to pose a bearish approach on USD/CHF would likely want to let the .9950-figure get taken out before looking to sell ‘lower-high’ resistance.

Chart prepared by James Stanley

--- Written by James Stanley, Analyst for DailyFX.com

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Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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