By: DailyForex.com
The USD/CHF pair rose during the Friday session, but it should be remembered that the pair fell rather precipitously earlier in the week. The 0.92 level held as support, which makes sense of course as it is a large round number. However, it appears that we are entering a very noisy area, and as such it will be difficult to see any serious progress higher in this pair.
The 0.9450 level seems to be the massive resistance that would have to be overcome in order to start buying this pair on a longer-term basis, and as such I am actually looking for some type of sell signal in the near future.
It appears that we have recently broken bottom of consolidation, and this of course would be a continuation of the downtrend. While the Swiss National Bank doesn't like the Franc being strong, the truth is that they cannot fight the entire marketplace. Also, it should be kept in mind that the exchange rate with the US dollar isn't anywhere near as important to them as the exchange rate with the Euro.
Follow the Trend
The trend is most certainly down over the last several months, and I see no reason why this is about to change. After all, the Swiss franc is also a safety currency as well. In the past, it was actually prone to rise at times of risk taking, as opposed to falling like you would expect. Because of this, it is considered a much safer currency and Switzerland and the United States.
This of course has changed over the last couple of years as the SNB has become so aggressive in devaluing the Franc. Looking forward, I don't know when the value of the Swiss franc becomes too much for the central bank, but it's entirely possible that we won't see it anytime soon. This is mainly because the Swiss have been intervening in the market so much, the one has to wonder whether or not they are prepared to continue to take the kind of losses they have. On signs of a week candle below the 0.9450 handle, I am without a doubt shorting this pair.