USD/CHF Rejects Daily 38% Retracement

The USD/CHF has returned to its range-bound tendencies following yesterday’s FED Interest Rate Decision. However, Eurozone CPI, U.S. Non-Farm Payrolls, and the U.S. ISM Non-Manufacturing PMI are ready to shake up the action in the next 24 hours. If you are trading the Swissie, it is best to not get too accustomed to slow price action and small daily ranges ― a significant move is likely just around the bend.

USD/CHF: Late-Week Technical Outlook

Since the bullish breakout of April 23, the USD/CHF has tightened between the 1.0125 and 1.0235 handles. Wednesday’s FED announcements spiked participation, yet could not drive rates out of this value area. Following a dramatic sell-off and vicinity test of April’s 38% Retracement (1.0119), the Swissie returned to the 1.0175 area for daily settlement.

Here are the levels to watch in this market going into Friday’s U.S. NFP release:

• Resistance(1): Double Top, 1.0230-1.0236
• Support(1): Daily SMA, 1.0161
• Support(2): 38% April’s Range, 1.0119

Bottom Line: The uptrend of April remains valid as rates have yet to post an extended correction. Until the 38% Retracement of April’s range (1.0119) is violated, a bullish bias is warranted in the Swissie.

However, the Double Top at 1.0230-36 is set up as a formidable zone of resistance. In the event the USD/CHF rallies to this area, a tight counter-trend trade isn’t a bad way to get in on the action. Until elected, I will have sell orders in queue from 1.0226. With an initial stop at 1.0251, this trade produces 25 pips on a standard 1:1 risk vs reward management plan.