Brexit Chaos Prompts A Turnaround In The USD
Shain Vernier • 1 min read
After showing weakness throughout the Asia-Pacific and European sessions, the Greenback is rallying against the Euro, British pound, and Canadian dollar. It appears that the sudden resignation of Boris Johnson in the U.K. is driving currency traders into the USD.
Political events always have the potential to shake markets to the core. The process of Brexit has been rocky, with today’s resignations of David Davis and Boris Johnson throwing traders yet another curveball. Let’s take a look at the USD/CHF and see if there is a way to profit from the action.
The surprise headlines of the last 24 hours from the U.K. have brought traders to the Swissie in force. Participation levels are high and a nice 64 pip daily range has been the product. At press time, price is breaking above a key technical level on the USD/CHF daily chart.
Here are the areas to watch for the remainder of the trading day:
- Resistance(1): Triple-Top Formation, .9990-.9985
- Support(1): Daily SMA, .9911
- Support(2): Bollinger MP, .9908
Bottom Line: A close above the Daily SMA and Bollinger MP for the USD/CHF will be an extremely bullish signal moving forward. If this occurs, a sell from the Triple-Top pattern may come into play later this week.
Going short from .9984 is a good way to capitalize on the recent news cycle. With an initial stop loss at 1.0026, this trade produces 42 pips when implementing a 1:1 risk vs reward scenario.
Given the upheaval of the Brexit process, a test of par for the USD/CHF is a possibility for later in the week. If price breaks above daily resistance, selling the Triple Top will be a good way to take a few pips from this market.