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!