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It’s A Non-Committal Day On The Forex

Thus far, it has been a slow day on the forex. Aside from the commodity dollars, the majors are in relative consolidation following a group of weak U.S. economic numbers. At this point, it appears that holiday trading conditions are already upon us.

Safe-havens are seeing some action, led by a rally in gold. The USD/CHF and USD/JPY are following suit, modestly rotating to the bear. It appears that sentiment is mixed among active traders today, with safe-havens and stocks rallying amid light participation.

Slow Forex Conditions: USD/CHF In Heavy Rotation Near .9850

The mid-June daily downtrend in the USD/CHF is currently absorbing a stiff challenge. Rates have bounced from the .9700 handle by more than 150 pips ― is a return to par value in the cards by July 31?

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

Well, a July bull run to par is certainly a possibility. However, given the current fundamentals facing the USD, another 150 pip gain is likely to take a considerable period to realize. Rate cuts and fading economic performance typically don’t do much for the Greenback against the Swissie; if the USD/CHF hits 1.0000 this month, it will likely take at least a few weeks to do so.

Here are the levels to watch for the remainder of the forex session:

  • Resistance(1): Bollinger MP, 0.9885
  • Support(1): Daily SMA, .9841

Bottom Line: Trading the forex during periods of sparse participation is always a challenge. When doing so, it is best to look for modest profit targets and keep stop losses tight.

For the rest of the day, I will be selling the USD/CHF’s daily Bollinger MP from 0.9984. Using a tight 8 pip stop loss, this trade produces 8 pips on a standard 1:1 risk vs reward management plan.

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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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