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Talking Points:
- USD/CHF Technical Strategy: Flat
- USD/CHF has continued to congest after failing to break through Fibonacci support at .9681.
- As Swissie continues to trade within this symmetrical wedge formation, direction remains unclear until more concerted price action is shown.
USD/CHF has had one of the more interesting support/resistance inflections this week, as we’ve now seen four consecutive days of support at a key Fibonacci level of .9681. This is the 50% retracement of the ‘big picture move,’ taking the 2008 high to the 2011 low before the Swiss National Bank instituted the peg in the currency to the Euro. The symmetrical wedge connecting the highs of March to the highs of August, and the lows of May to the ‘panic low’ on August 24th continues to define price action in the USD/CHF, and until this wedge is broken by either higher or lower prices, direction remains unclear and the trend remains cloudy.
Should the resistance trend-line clear first, which as of tomorrow would be in the .9840 vicinity, long positions become attractive with targets towards .9900 (price action high and psychological resistance), parity at 1.0000 (‘major psychological level’), and then 1.0239 (the 2015 high). Directly above that is the 61.8% retracement of the same ‘big picture move’ mentioned at the open of this article, and that’s just shy of the 1.0300 psychological level at 1.0298.
Alternatively, the short side could be entertained with breaks and then intra-day resistance at the same .9681 price that’s offered such rigid support. Should .9681 break, traders can wait for resistance to show in the vicinity of old support, with targets at .9550 (higher-low price action support), .9500 (confluent zone of support with the 61.8% retracement of the most recent major move plus being a ‘major psychological level’), and then .9270 (50% retracement of most recent major move).
Written by James Stanley of DailyFX; you can join his distribution list with this link, and you can converse with him over Twitter @JStanleyFX.