Talking Points
- Cycle analysis points to broader move higher
- Year-to-date high at .9125 now key upside pivot
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Cycle analysis pinpointed the turn at the start of the year in USD against the European currencies. We believe there is a good chance that this turn will lead to a more important USD move higher in the weeks and months ahead. One of the main pairs that we are watching for clues, as it has a tendency to be a leader, is USD/CHF. The rate made its low for 2013 on December 27th at the 127% extension of the January to May advance and has moved steadily higher ever since. The break and recent successful re-test of the 2nd square root relationship of the 2013 low at .8985 is very constructive and points to further gains. A push through the year-to-date high at .9125 in the next few days should kick off another bout of material USD strength. Unexpected aggressive weakness below .8985 would warn that a more prolonged sideways period is due.
USD/CHF Daily Chart: January 16, 2014
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risks in Coming Sessions:
LEVELS TO WATCH
Resistance: .9080 (Gann), .9125 (2014 YTD High)
Support: .9000 (Fibonacci), .8925 (Fibonacci)
Strategy: Buy USD/CHF on weakness
Entry: Buy USD/CHF at .9000
Stop: 1-day close below .8925
Target: .9175
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter at@KKerrFX.