The bigger picture is that we are in the midst of trying to form some type of bottoming pattern. If this kicks off, it could be the trade of 2026.
The US dollar initially plunged against the Swiss franc but appears to be seeing a little bit of support near the 0.80 level and just above the 50-day EMA. This is a pair that I've been covering for a while here at Daily Forex, as it's one of my favorite trades. I do get the occasional comment about how the pair doesn't move, but that's missing the bigger picture.
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The bigger picture is that we are in the midst of trying to form some type of bottoming pattern, and the Swiss National Bank is more likely than not going to defend the 0.79 level. Beyond that, you're also collecting profit at the end of every day in the form of interest rate payments.
A Lucrative Trade
I have employed a buy-on-the-dip strategy for several months now, understanding that eventually it ends and maybe I get stopped out, but there's also a real possibility that I wake up one morning here in the United States to a dollar that is above the 200-day EMA, which is technically in an uptrend. This has been one of the more lucrative trades this year, and I think it will continue to be so as long as the Swiss do not want a strengthened Swiss franc.
I look at dips as opportunities. I believe you should as well. If we were to break above the 200-day EMA, my target is at least 0.85. That would take some time to get to, but you would be collecting profit in the form of interest rate swaps every day along the way. This, to me, is possibly going to be one of the better setups once it breaks out, and in the meantime, has been quite profitable if you're willing to just play the range. I do believe that if we break significantly below 0.79, the Swiss National Bank will get involved.
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