- During the trading session on Tuesday, we've seen the US dollar pick up a little bit of strength against the Swiss franc as traders are trying to sort out whether or not there is some type of floor being built into the market here.
- Keep in mind that the 0.84 level underneath is a massive support level on the long-term charts and therefore it makes a certain amount of sense that we would see a lot of buyers in the general vicinity.
- All things being equal, this is a market that if we were to break above the 0.850 level, then it's likely the market were to go looking to the 0.87 level.
- On the other hand, if we turn around and break down below the 0.84 level underneath, then that really gets things in a dark place for the US dollar.
While it Could Fall….
In that environment, I would be more likely to short the US dollar against other currencies simply because the Swiss National Bank has a long history of intervening in the markets if the Swiss franc gets a bit too strong.
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So with all of that being said, I think you have to look at this through the prism of are we forming a bottom? Does the US dollar take off? And if it does, then I think I will become a long only trader. I don't have any interest in shorting at least, not at this point, but if we do see it break down here, probably what we will see is other currencies such as the pound, the Australian dollar, New Zealand dollar, Euro, et cetera, strengthen against the greenback.
I will probably use this as a secondary indicator as to what to do in those other markets. Keep in mind that this pair tends to move a little slower than many others, so I believe that you would get “more milage” out of the others anyway.
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