Technical Sentiment: Bullish

Key Takeaways

• U.S. Consumer Confidence Index improved moderately to 83.0;
• Core Durable Goods Orders post small gain of 0.1%;
• USD/CHF makes fresh 15-week high.

USD/CHF uptrend gained one more confirmation this week after a Daily bar close above 0.8950. With the U.S. lifted on positive data, the uptrend is about to test the 200-Day Simple Moving Average, with the large round handle at 0.9000 being a very appetizing handle for traders.

Technical Analysis

USD/CHF is currently trading at a 15-week high in the 0.8975 region, aiming directly at the 200-Day Simple Moving Average (priced at 0.8991). The long term trend has already completely turned around and is now bullish. The double bottom reversal pattern in early May signaled this and the Higher High above March’s top at 0.8951 sealed the deal.

Fibonacci Retracement levels based on the Low at 0.8698 and major swing highs from 6^th October (0.9454), 7^th November (0.9249) and 21^st January (0.9155) indicate a major confluence between 0.8973 and 0.8987. If USD/CHF rallies and stabilizes above this confluence and the 200-Day SMA, prices could aim toward 0.9155/65 in the coming month.

Daily Stochastic remains in overbought territory, albeit without any bearish price action signals and in light of the recent U.S. strength there is no reason to short blindly before a high is confirmed. Potential rejections from the 200-Day Simple Moving Average / 0.9000 handle will most likely be short-lived, as dips should be limited to 0.8950, worst case scenario down to the 100-Day Moving Average at 0.8890. Consequently, buying dips remains the preferred strategy for USD/CHF.

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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets