The USD/CHF has been consolidating, not unlike its mirror twin the EUR/USD just above the 62 Day EMA at 0.9660 which also happens to be the 61.8% retracement level for all of July's price action. This is a strong level of support & resistance historically speaking. The pair has paused or reversed at this same price level many times since 2010, finding the level as strong resistance in both May & June of this year, and now it becomes support once again. If price can break lower from here, there is a moderate technical vacuum down to roughly 9460, but below 9460 there is 'nothing but air' down to the 4 month low at 0.9042. While it might be a real stretch to think that the pair could reach that level anytime soon, and you would be right, it would be a huge stretch fundamentally speaking, but technically speaking it is not that far off. I'm not saying that it will drop to that level anytime soon, but if this level of support breaks there will certainly be lower prices for the pair soon after. Back in the real world there are many hurdles in the way, starting with Daily Support levels at 0.9670, 0.9387 & 0.9621 along with stronger support levels such as the Weekly S1 at 0.9583 & Monthly S1 at 0.9500. To the upside we see Daily Resistance at 0.9717 (Also the 50% level of July's price action) with the Daily R2, Weekly Pivot & Monthly Pivots all converging at 0.9735-0.9740. With so many levels on either side of the pair to clear, one might suggest sitting on the sidelines until a clear direction is evident. However, the Daily Charts has printed a pseudo bearish flag formation, so I am cautiously bearish on the pair below 0.9660.
USD/CHF Consolidation Continues
By Colin Jessup
By Colin Jessup
Colin Jessup is certified in both Securities & Technical Analysis from the Canadian Securities Institute, founder of Omegatrader Canada and a Live Trading Coach at TheTradingCanuck.com, a service that calls live trades to captures dozens of pips daily with low drawdown.
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