USD/CHF Technical Analysis: Clean Slice Through Parity Support

2017-03-22 17:31:00 James Stanley

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Talking Points:

USD/CHF Technical Strategy: intermediate-term: mixed + choppy; short-term: bearish.
Swissy put in a strong and decisive break of support around the parity figure after last week’s FOMC rate hike.
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In our last article, we looked at a bearish channel break in USD/CHF with a significant zone of support sitting just underneath price action. This zone ran from the psychological level at parity up to the Fibonacci level at 1.0038; but perhaps most importantly, this area had exhibited numerous iterations of support and resistance over the past couple of years.

At last week’s rate hike from the Federal Reserve, an aggressive bout of USD-weakness transpired, and this drove Swissy price action below this zone of support without so much as a pause on the hourly chart:

Chart prepared by James Stanley

With this type of bearish momentum, in which even longer-term support levels show a pittance of actual support – traders need to take notice, particularly if trying to time a reversal. The simple fact that bulls were not able to hold-up price action during a sell-off at a key level is deductively-highlighting the prospect for bearish continuation.

The zone around .9850 is particularly interesting for that next pause-point on the move-lower. And if this doesn’t hold, just below, we have an approximate 50-pip zone of potential support that could be very interesting if it comes into-play. This is identified on the S2 zone of support below. For near-term resistance, we have a confluent zone around .9950 that could become attractive for bearish-continuation moves; with stops wedged above the level of parity.