USD/CHF Trading At Key Technical Level

Posted Monday, May 6, 2019 by
Shain Vernier • 1 min read

Trading action has been light to open the forex week, featuring tight ranges across the majors. The biggest movers and shakers have been the USD/JPY and AUD/USD. In fact, the USD/JPY opened the week GAP down near the 110.00 level. Given the sparsely populated economic calendar, it appears as though traders are content to focus upon equities and commodities for the time being.

During periods of limited action, trading profitably can be a challenge. This has certainly been the case for the majors, with slow conditions being the order of the day. However, the three leading U.S. indices are each down almost 1% following fresh concerns over the U.S./China trade situation. So, while the forex is range bound, there is heightened volatility in the equities and commodity markets.

USD/CHF: Technical Outlook

Last Friday was a tough session for the USD vs the safe-havens. Today’s action is a little better, with gains against the Swiss franc leading the recovery. Consistent bids hitting the USD/CHF has brought about a hard test of the Daily SMA. At this point, the 1.0175 handle in the Swissy is driving heavy two-way participation.

USD/CHF, Daily Chart
USD/CHF, Daily Chart

Here are a few levels to watch for the near future:

  • Resistance(1): Daily SMA, 1.0178
  • Resistance(2): Double Top, 1.0230-36
  • Support(1): 38% April’s Range, 1.0119

Bottom Line: The 38% Fibonacci retracement of April’s range is coming into view for the USD/CHF. While the daily trend remains decisively bullish, any opportunity to join the long side of this market is an ideal way forward. With a bit of luck, we will get a selloff and dip to the neighborhood of 1.0119 by mid-week.

Until elected, I will have buy orders queued up from 1.0126. With an initial stop loss at 1.0094, this trade produces 25 pips on a slightly sub-1:1 risk vs reward management plan.

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