Swiss Franc Technical Analysis – USD/CHF, EUR/CHF. Ranges or Breakouts?
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Swiss Franc, USD/CHF, EUR/CHF - Talking Points
- USD/CHF has consolidated in a wide range over several months
- EUR/CHF tried to make a run for it higher, but has stalled for now
- Can the Swiss Franc develop a trend against the US Dollar or the Euro?
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USD/CHF TECHNICAL ANALYSIS
Lining up the April 2021 high of 0.94726 and the November 2021 peak of 0.93735, there is a descending trend line that was challenged at the end of last month. The trend line resistance held that time.
There is a cluster of medium and long term simple moving averages (SMA) between
0.91660 and 0.92124. The price has been unable to break significantly away from these SMAs for several months, although the short term 10-day SMA has followed the price higher. This may suggest short term bullish momentum.
Resistance might be at the previous highs and pivot points of 0.92781, 0.92944, 0.93430 and 0.93735.
On the downside, support could be at the previous lows and pivot points of 0.91772, 0.91079, 0.91024, 0.90920 and 0.90868.
Overall, the 0.90868 – 0.93375 range has held in USD/CHF for six months and we could be in a range trading environment. If this is the case, a moving average envelope (MAE) might be worth looking at.
Of course, if a trend unfolds, the range trading strategy is likely to underperform. It should be noted though that past performance is not indicative of future results.
The MAE differs from a Bollinger Band as the distance from the SMA remains consistent. The chart below illustrates the 1%, 1.5% and 2% distance from the 21-day SMA.
USD/CHF MOVING AVERAGE ENVELOPE CHART
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EUR/CHF TECHNICAL ANALYSIS
EUR/CHF broke above the upper 21-day SMA based Bolling Band last week after the ECB’s hawkish announcements. It closed back inside the band yesterday. This could indicate that a reversal might unfold.
Initial support might be at the pivot point of 1.05117, then further down at another pivot point of 1.03266 and the previous low of 1.03001. Resistance may lie at the recent high of 1.06091.
--- Written by Daniel McCarthy, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.