Safe-haven Trading Plan For The USD/CHF

Posted Friday, January 12, 2018 by
Shain Vernier • 1 min read

In a similar fashion to yesterday’s session, safe-havens are performing well. Gold is banging higher and the Swiss franc continues to strengthen against the USD. It is a curious phenomenon, but these markets are attracting investment capital amid one of the largest stock rallies in recent history.

One thing is for sure—money is flowing into the financial markets at an astounding rate.

USD/CHF Technicals

Thursday’s trading session was much the same as today’s. U.S. inflation metrics brought little to the table, followed by a collective rally in U.S. indices and safe-havens. Today’s chart for the Swissy illustrates this sentiment from the perspective of a safe-haven currency.

USD/CHF, Daily Chart

In a market update from yesterday, I outlined the key areas of support for the USD/CHF and a potential long trade setup. Today’s action has brought these levels into play.

The key support levels from Thursday’s update have not changed:

  • Support(1): Swing Low, .9699
  • Support(2): 62% Sept. Low/Oct. High Retracement, .9656

Thus far, the swing low at .9699 has withstood several tests. As of this writing, price is in the neighborhood of .9710, slightly above this level.

Bottom Line: While the swing low is proving valid, holding out for the 62% Fibonacci retracement (.9656) gives us a premium entry to the long. This market is grinding south on a daily basis, so excellent trade location is imperative.

A long trade entry from .9657 with an initial stop at .9624 provides a solid chance of realizing a 25 pip profit. Consolidation is likely after election, so this trade could take awhile to hit the profit target. Even though it is not quite a true 1:1 R/R, the odds of rotation back to .9700 make the play a worthwhile endeavor.

As always trade smart and for tomorrow!

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