U.S. Employment, Philly Fed Numbers Are Out: Time To Trade The USD/CHF!

The U.S. session has started with a bang, showing considerable volatility across the majors. A rare negative cash open for U.S. equities paired with weakness in the USD against the Euro, Japanese yen, and Swiss franc is this morning’s story.

A slew of unemployment metrics are out, so let’s take a quick look:

Event                                                         Previous                Projected                Actual

Continuing Jobless Claims (Oct. 6)            1.904M                 1.900M                  1.888M

Initial Jobless Claims (Oct. 13)                   244K                        240K                      222K                  

Philadelphia FED Survey (Oct.)                   23.8                          22.0                       27.9

Today’s Philly FED release came in much higher than expected, shattering the previous and projected values. From a practical standpoint, this arbitrary metric should have prompted investors to get long the USD. So far today, it hasn’t happened.

The U.S. Federal Reserve is clearly on everyone’s mind as we close out 2017. In short, unemployment is down and the FED’s own numbers say manufacturing is stronger than expected. Those types of fundamentals are typically good for the USD. Today’s action tells us otherwise.

USD/CHF Technical Outlook

Good action in today’s forex market has brought us an opportunity to go long the USD/CHF.

USD/CHF, Daily Chart

Yesterday’s call for a short from the 50% retracement of the yearly range did not develop as price stalled out short of our entry. Here are a few keys for the rest of the U.S. session:

• Support Level 1, Daily SMA: .9731

• Support Level 2, 20 Day EMA: .9733

• Support Level 3, Bollinger MP: .9728

• The round number of .9700 will serve as a key psyche level if the USD/CHF continues to sell off.

Bottom line: I don’t like bucking heavy intraday trends, but that is what the play is here. A long from the resistance zone of .9735 to .9725 is good trade location for a retracement back towards the intermediate term value area.

An initial stop below .9700 with a profit target at .9770 gives a 1:1 R/R setup. Currently, we have seen price hit .9736. This trade can go anytime.

As always, trade smart and watch the risk management!