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Talking Points:
- USD/CHF Technical Strategy: Intermediate-term up-trend still alive; near-term bearish.
- The bullish price action previously showing in USD/CHF has waned as prices are now testing deeper support levels.
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In our last article, we looked at the continued congestion in USD/CHF after the pair had surged up to fresh six-year highs in Mid-December. After a subsequent attempt to re-take those highs had failed just after the turn of the New Year, prices in USD/CHF have continued to head-lower without significant motivation. On the chart below, we’re looking at short-term price action in USD/CHF which still has yet to indicate strength in order to align with the longer-term trend. With this morning’s price action catching resistance off of old support (and also the 38.2% retracement of the post-Election move), traders would likely want to avoid moving forward with bullish strategies just yet.
Chart prepared by James Stanley
The daily chart of USD/CHF, however, suggests that additional strength can be sought. Of particular interest is the zone of support from .9949 up to the parity level (1.0000), as this was a vitally important price action zone last year. The level at .9949 had helped to form range-resistance in USD/CHF throughout much of the second half of last year. This is also the 61.8% Fibonacci retracement of the major move in USD/CHF from the 2010 high to the 2011 low. And just a couple of pips below that at .9947, we have the 50% Fibonacci retracement of the post-Election move in the pair.
A support test in this region can open the door to bullish continuation strategies in the effort of trading an extension of the bullish move in the pair.
Chart prepared by James Stanley
--- Written by James Stanley, Analyst for DailyFX.com
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