Weekly Support In View For The USD/CHF

Posted Thursday, April 9, 2020 by
Shain Vernier • 1 min read

Going into this weekend’s Easter holiday, safe-havens are in demand. For the session, GOLD is up almost 4%, with the USD/CHF and USD/JPY posting stiff intraday downtrends. Even though risk assets are also faring well, it appears as though institutional traders are buying insurance ahead of the three-day break.

Tomorrow marks the observance of Good Friday. Subsequently, most financial markets will be closed for business. Given the pause in trade, this afternoon’s action is going to clue us in on the broader market sentiment. 

A bit earlier in the session, the Baker-Hughes Rig Count was released to the public. The figure came in at 602, a one-week drop of 60 rigs from last Friday. As we roll into the peak summer demand season, it looks like the future of North American drilling is uncertain, at best.

Let’s take a look at the USD/CHF and see if there is a trade or two on the horizon.

USD/CHF Posts Negative Holiday-Shortened Week

The weekly chart for the Swissy gives us a good look at the chaos brought on by the COVID-19 outbreak. Currency values have whipsawed for more than a month, highlighted by steep volatility. Ahead of the Easter break, it appears that forex players are interested in hedging their bets against the unknown.

USD/CHF, Weekly Chart
USD/CHF, Weekly Chart

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

  • Resistance(1): Daily SMA, 0.9666
  • Support(1): 38% Retracement 0.9626

Bottom Line: If we see the Swiss franc continue to rally, a buying opportunity may set up in the USD/CHF. Until elected, I will have buy orders in the queue from 0.9626. With an initial stop loss at 0.9598, this trade produces 25 pips on a sub-1:1 risk vs reward ratio.

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