The USD is very strong lately as the USDX has managed to rally from 94.63 to 99.92 in seven days and it could jump way above the 100.00 psychological level, signaling a USD appreciation versus the other major currencies.
The Swiss Franc is used as a safe-haven currency as well, it has increased significantly reinforced versus the EUR and GBP. There is a high demand for CHF when we have a risk aversion sentiment.
USD/CHF is trading at 0.9605 level, right below a major resistance area. Normally, when a central bank cuts the key interest rate, the currency will depreciate, but not in the United States as the USD remains a safe-haven currency. So, the FED stimulus measures have boosted the dollar.
USD/CHF was rejected by the 0.9186 static support level, failing to reach the lower median line (LML) of the descending pitchfork. Technically, the rebound is natural after the price has closed the previous Monday gap down, USD/CHF has made a bullish engulfing.
You can notice that we have a strong resistance area near 0.9645 level, the price was almost to reach the first resistance level at R1 (0.9650). A rejection, false breakout with a great separation or a reversal pattern around 0.9645 will signal a potential decrease on the short term.
A valid breakout above the R1 (0.9650) level will signal a further increase towards the upper median line (UML) and towards the R2 (0.9803) level.
- TRADING TIPS & CONCLUSION
USD/CHF is trapped within an extended sideways movement on the long term, between 0.9186 and 1.0239 levels. The price remains under pressure as long as it is traded under the 0.9645 area, only a valid breakout above the upper median line (UML) will confirm a larger upside movement, even towards 1.0239 resistance.
A minor drop could give us a chance to go long, the price could come back down to test and retest the median line (ML) and the Pivot Point (0.9416) level before it resumes the upside movement. The outlook is bullish on the short term as the price is trapped within an upward channel on the H1 chart.
It could decrease on the short term if it closes and stabilizes below 0.9568 level and if the USDX declines. The first downside target is seen near 0.9450 level.
