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USD/CHF Price Analysis Close to an exhaustion area

USD/CHF Price Analysis: although the long-term bias looks bullish, selling into rallies offers a sound short-term setup

Market highlights from the last week

Thursday 30 April: The Swiss KOF business confidence index declined very sharply to 63.5 for April from 91.7 the previous month – the sharpest monthly decline on record – although the index held marginally above record lows

Friday 1 May: Risk conditions remained a significant element on Monday with greater caution continuing to underpin the Swiss currency on defensive grounds. EUR/CHF traded just below the 1.0550 level with 0'>USD/CHF just below 0.9650 level. Markets will monitor the latest National Bank data to assess the extent of intervention to curb franc gains during the week

Monday 4 May: 0'>EUR/CHF was unable to gain any support, especially with weaker risk appetite, and retreated to the 1.0520 area against the franc with USD/CHF settling just below 0.9650

Tuesday 5 May: The US Markit PMI services-sector index was revised lower – to record a low of 26.7 from the flash reading of 27.0 – with output charges declining sharply

Wednesday 6 April: US ADP data reported a private sector employment decline of more than 20.0 million for April

USD/CHF Price Analysis

Let us have a look at the technical viewpoint.

Monthly: The dip was bought, and the rally sold, resulting in little net change by the close in March. Price action is holding within the top half of the March range.

Weekly: Mixed trading for the last seven weeks. We are holding within the week 16 March range (0.9900-0.9392), Inside Soldiers = indecision. The RSI (Relative Strength Index) is close to the 50 mid-point highlighting that we are non-trending.

Daily: Four days of net gains. Previous resistance was located at 0.9802. Trend of higher lows is seen at 0.9600. We are possibly forming a bullish ascending triangle pattern that has an eventual bias to break to the upside.

Intraday 4-hour: The 261.8 per cent extension level is located at 0.9780 (from 0.9589-0.9662). The move higher can be seen in 5 waves, Elliott Wave (5 waves up followed by 3 waves down).

Outlook: Although the long-term bias looks bullish, selling into rallies offers a sound short-term setup for a corrective ABC Elliott Wave formation lower.

Possible trade setup

Action: Selling at 0.9780

Stop: 0.9815

Targets: 0.9620

Potential return on risk to first target: R4.5 (reward 160 / risk 35)

US Dollar / Swiss Franc
Daily change
0.97133
Low: 0.97069
High: 0.97265

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