USD/CHF Weekly Outlook

USD/CHF's rise from 0.9634 extends sharply higher to 1.0606 last week, taking out mentioned 1.0352/83 resistance zone and then 100% projection of 0.9634 to 1.0249 from 0.9887 at 1.0502. From a short term angle, initial bias will remain on the upside as long as 1.0462 minor support holds. Further rally is now expected to be seen towards 161.8% projection at 1.0902. On the downside, below 1.0460 will indicate that an intraday top is in place and bring retreat. But pull back should be contained above 1.0296 support and bring rally resumption.

In the bigger picture, firm break of 1.0352/83 resistance zone (50% retracement of 1.1105 to 0.9634 at 1.0370 and 38.2% retracement of 1.1596 to 0.9634 at 1.0383) indicates that decline from 1.1596 has completed and a medium bottom is probably in place at 0.9634 . Sustained trading above 55 days EMA (now at 1.0325) supports this case too. Further rebound should then be seen to resistance zone of 1.0890 to 1.1596. With 38.2% retracement of 1.3283 to 0.9634 at 1.1028 in side the range, strong resistance should be seen there, at least initially. On the downside, break of 0.9995 support is needed to confirm rebound from 0.9634 has completed. Otherwise, another rise is still in favor even in case of deep pull back.

In the longer term picture, a pattern of lower highs is clearly seen in USD/CHF since the medium term down trend begins at 1.3283. While 0.9634 could be a medium term bottom, there is no clear indicate of long term trend reversal yet. 1.1596 resistance will be a key factor that's required to confirm long term down trend reversal, at least before any clear reversal pattern forms. Meanwhile, the structure of the current rise from 0.9634 will provide the early indication on whether it's merely a correction in the longer term down trend only.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box