- The USD/CHF has gone back and forth during the trading session on Monday, in what would have been somewhat light trading since it was Martin Luther King Junior Day in the United States.
- We are also hanging around the 0.92 CHF level, an area that has historically been important in this pair, so it’s not if you are surprised to think that perhaps we are going to hang about.
Looking at this chart, you can see that the 50-Day EMA is sitting around the 0.94 level and dropping rather hard. That could offer a little bit of resistance, but it’s also worth noting that we have formed a bit of a megaphone pattern, which also quite often means that you are about to see a hard break in one direction or the other, typically a reversal in trend, although it does not have to be.
Keep in mind that the US dollar tends to move in the same direction as most currencies, so what we need to see is the US dollar take off to the upside against other currencies to back up any type of longer-term buying opportunity. If we can take out the 50-Day EMA or even the 0.94 level, then it’s likely that the dollar could start to really take off against the Swiss franc. In fact, at that point I would anticipate a move back up to the parity level, and when you look at a longer-term chart, you can see that we have been training in a bit of a range, so this all makes sense.
It's Too Early to Make Decisions
Furthermore, I would also point out that we had absolutely fallen out of bed initially from the parity level. Since then, we have been grinding slowly in what could be thought of as a potential longer-term rounding bottom, although it’s far too early to make that decision as to whether we would call it that.
Either way, I’m watching this chart very closely, because it should be important, especially as most people will be focusing on the Euro, the Australian dollar, etc. Quite often, the Swiss franc gets ignored, which leaves it an interesting market to hang onto for bigger swings as it tends to grind in one direction for long periods of time.
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