Talking Points
– USD/CHF was looking to break out of its downtrend, in place since January, but the upward move failed.
– But a sustained break could still be on the cards.
– See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for the week on the DailyFX Webinar Calendar.
USD/CHF has been falling since the beginning of 2017. Last week there were indications of a positive near-term outlook also suggested by the climb in the price above the 20- and 50-day moving averages, and in recent days it moved to, and briefly just above, the trendline marking the upper limits of the downward channel.
Chart 1: USD/CHF Daily Timeframe (January to April 2017)
This suggested that a break to the upside was possible and that small long positions should be considered. However, after hitting the upside of the trendline, the pair has dropped back into its downward trend.
Chart 2: USD/CHF One-Hour Timeframe (March 22 to April 11, 2017)
We can also see the pair stuck in this trend on the hourly chart. If a sustained break does occur above the trendline, a plausible target could be the January 3 high close to 1.0330, a level also reached on December 15 last year and on November 27, 2015. On the downside, the 50- and 20-day moving averages provide support at 1.0037 and 0.9991 respectively, while parity itself could provide psychological support. A stop could therefore be placed around 0.9950 to prevent further losses if those supports fail to hold.
— Written by Oliver Morrison, Analyst
To contact Oliver, email him at oliver.morrison@ig.com
Follow Oliver on Twitter @OPWMorrison
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