USDCHF trying to establish a bottom


Background

The probability of a rate rise by the US Federal Open Market Committee on June 14 jumped from 50% to 65% post the French election result as risk appetite resurfaced across global markets. But the “hard” data out of the US has yet to back up the “soft” data coming from surveys (or election results). 

Today we get another survey – consumer confidence. Of more significance will be Friday’s first-quarter GDP number where estimates centre around 1.2% annually, but with a wide range, opening up the possibility of volatility in the USD when the actual number is released.

Meanwhile, the Swiss National Bank will be pleased to see the EUR rally against the CHF but will remain vigilant. Intervention to cap the exchange rate continues and the policy rate is being held close to minus 0.75%.

Management and risk description

The weekend’s French election inspired a selloff in the dollar, which found support at 0.9860, to exactly match the potential left shoulder of a developing three-month Inverse Head and Shoulders formation (refer daily chart below). 

Also, from an Elliott Wave perspective, USDCHF also displays a completed zigzag corrective structure from last December’s 1.0345 high. Successful completion of this bottoming structure (with a sustained break above Neckline resistance) would herald an advance toward the 1.0400 level over the coming weeks.

In the short term, support lies at about 0.9930, 0.9900 max. to yield a rally toward the key 1.0085 (Neckline resistance).

Parameters


Entry: today: USDCHF is seen as a buy at market (0.9965).

Stop: 50% just under 0.9930 and 50% just under 0.9900, initially.

Target: 1.0319.

Time horizon: allow several weeks for target to be met.

USDCHF daily chart (click to expand)

Source: ThomsonReuters 

USDCHF weekly chart (click to expand)

Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more 

– Edited by Gayle Bryant

For more forex click here

Non-independent investment research disclaimer applies. Read more
A compiled overview of Trade Views provided on TradingFloor.com is found here

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USDCHF trying to establish a bottom

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