USD Rallies-Position Long For The USD/CHF

It has been an active Friday, with all of the talk revolving around the U.S. Treasury markets. Yields have topped 2.83% on the 10-year note, a level not seen since January of 2014. The sudden run to fixed-income assets has spooked equities traders. As of this writing, the DJIA is down over 400 points and the S&P 500 is off 35.

The gains posted by bonds have come as welcome news to the fading greenback. The USD is in the midst of a considerable rally across the majors amid the newfound optimism. Bullish pressure in the Swissy has set up a possible weekend position trade for the adventurous.

USD/CHF Technicals

The daily chart gives us a comprehensive picture of the prevailing trend and upside potential for the USD/CHF. Today’s fundamental developments have created a potential long setup for the Swissy.

Here are the key support and resistance levels for the coming sessions:

• Resistance (1): 38% retracement of current bear run, .9399
• Support (1): Session low, .9251
• Support (2): Swing low, .9256

Bottom Line: The USD/CHF is prone to entering periods of prolonged consolidation. With today’s introduction of the bond market storyline and forthcoming rate hikes, the dynamic for the Swissy has fundamentally shifted.

I suspect that we may have formed an intermediate-term low at .9256. A long at market from .9280 to .9300 with an initial stop at .9249 produces a trade with a nice upside potential. Depending upon the exact entry point, this trade will produce between 31 and 51 pips using a 1:1 R/R management plan.

This is a position trade, meaning there is a degree of systemic risk involved. Holding positions over a weekend is not for everyone. In the event that your trading account cannot support the risk, don’t sweat it. There will be a myriad of fresh trade setups in the coming week!

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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