In this series we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. The US Dollar has plummeted more than 3.6% against the Swiss Franc from the yearly highs with price now targeting confluence support near the 2019 yearly open. These are the updated targets and invalidation levels that matter on the USD/CHF weekly price chart the close of the week. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
USD/CHF Weekly Price Chart
Notes: USD/CHF has broken below 2018 trendline support with the decline now approaching a key zone of confluence support at 9828/39– a region defined by the 78.6% retracement of the 2019 range and the yearly open. Note that the median-line of a proposed pitchfork extending off the highs also converges on this zone and further highlights its technical significance.
Initial resistance stands at the highlighted trendline confluence just below parity with broader bearish invalidation now set to 1.0091. A downside break / weekly close below this key support zone is needed to keep the short-bias viable targeting 9716 and more significant support at 9588-9600.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line: USD/CHF has broken below a year-long trendline with the immediate focus on the 9828/39 support confluence- look for a reaction there. From a trading standpoint, a good spot to reduce short exposure / lower protective stops. Look for possible near-term price exhaustion on a test lower – ultimately, we’ll favor fading weakness sub-1.0091. I’ll publish an updated USD/CHF scalp setup once we get further clarity in near-term price action.
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USD/CHF Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-long USD/CHF – the ratio stands at +2.42 (70.7% of traders are long) – bearish reading
- Long positions are 4.7% higher than yesterday and 36.8% higher from last week
- Short positions are 22.2% lower than yesterday and 54.0% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CHF prices may continue to fall. Traders are further net-long than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger USD/CHF-bearish contrarian trading bias from a sentiment standpoint.
See how shifts in USD/CHF retail positioning are impacting trend- Learn more about sentiment!
Key Swiss / US Data Releases
Previous Weekly Technical Charts
— Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex