Indices, USD Catching Bids: Pullback Buy For The USD/CHF

The markets appear to be taking a break from the wild volatility of the past three sessions. Both the DJIA and S&P 500 are up modestly on the open, with the USD attempting to recover against several of the majors. It will be interesting to see if the Greenback continues to post gains ahead of Wednesday’s U.S. GDP (Q4) release.

Commodities have sold off considerably, led by a trend day down for gold. If you are trading gold, be aware that the front-month futures contract is preparing to roll over. Volumes between the April and June contracts are near a 50/50 split. Diluted volumes are something to be aware of as chaotic intraday price action is often the result.

The exit from safe-havens by investors has impacted today’s trade of the Swissie. Let’s dig into the technicals of the USD/CHF and see if we can pinpoint where this market is heading.

USD/CHF Technicals

In an update from yesterday, I outlined a long trade setup from support on the daily timeframe. Price came within a few pips of entry before reversing. So it goes when using horizontal levels to identify market entry — many good trades go unelected.

For the first time in a week, the USD/CHF has a chance to close in the green. Early session gains of 34 pips have this market above several support levels. Here are the numbers to watch for the remainder of the U.S. session:

• Support(1): 20 Day EMA, .9463
• Support(2): Bollinger MP, .9459
• Support(3): Daily SMA, .9435

Bottom Line: Buying in from a retracement level is a solid way to approach the bullish break in the Swissie. Longs from the 20 Day EMA at .9463 with an initial stop at .9431 lend a 15-25 pip return.

The USD/CHF trades in characteristically tight daily ranges, so a full blown 1:1 R/R for 32 pips is a bit much for this trade. If it is up by at least 15 pips as we head into the close, I will be looking to rack profits and exit the position.

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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