USD/CHF Weekly Outlook

USD/CHF's down trend extended further to as low as 1.0219 last week before recovering mildly. A temporary low is in place and initial bias is neutral this week for some consolidations. But after all, short term outlook remains bearish as long as 1.0449 resistance holds and another fall is still expected. Below 1.0219 will target lower trend line support (now at 1.0034). But we'd anticipate strong support at around parity to contain downside, at least initially. On the upside, break of 1.0449 resistance will in turn argue that a short term bottom is formed and turn focus to 1.0624/39 resistance zone for confirmation.

In the bigger picture, USD/CHF is possibly in the process of forming a medium term sideway pattern that started at the long term bottom of 0.9634 (2008 low). The pair will continue to stay in converging range of 0.9634/1.2296 for a while. A break of either 0.9916 support or 1.1729 resistance is needed to indicate that USD/CHF is back into a directional trend. Otherwise, medium term outlook will remain neutral.

In the longer term picture, a long term bottom is no doubt in place at 0.9634 with bullish convergence condition in monthly MACD. But the current outlook is rather unclear. Firstly, USD/CHF is staying in convergence range of 0.9634/1.2296. Secondly USD/CHF lacks sustained buying to send it through 55 months EMA (now at 1.1394) decisively yet. We'd stay neutral first until a break out from the current medium term range.

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