Scalping The USD/CHF Before The FED

Posted Wednesday, January 31, 2018 by
Shain Vernier • 2 min read

Since late October and early November 2017, the bears have taken full control of the Swissy. Downside support levels have not proved to be even remotely effective. For the period, price has fallen from over par to the recent lows established at .9288.

Is the USD/CHF poised to recover in the coming months? Only time will tell, but today’s U.S. Federal Reserve Announcements will give us a better idea of where this market is going. A dovish tone will most certainly extend the USD’s recent losses against the Swiss franc.

USD/CHF Technicals

The recent flood to safe-havens has been a fascinating lesson in market behaviour. Not only have investors moved into Swiss francs, Japanese yen, and bullion, but also into U.S. equities. The action in the USD/CHF has been particularly heavy during these periods of robust participation.

USD/CHF, Daily Chart

Earlier in the session, price tested the swing low at .9288 with vigor. Buyers stepped in, driving values above the .9300 handle.

Firm tests are often precursors to breakout scenarios. The rejection of .9288 is likely a sign of a considerable number of bullish stop orders located just below .9288. In the event that they are triggered, order flow will increase driving price lower.

Bottom Line: Today’s FED announcements are going to be huge for the Swissy. While a bearish breakout below the Swing Low is possible, price has to get there first. It may happen on the FED policy announcements.

A short scalp from .9287 is a good way to grab a few points with the prevailing trend. A 1:1 R/R management plan yields 14 pips with an initial stop loss at .9301.

This trade may go live in conjunction with this afternoon’s FED actions. Heightened volatility will be the order of the day, so be sure that your stops are down and leverage is in check!  

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