Potential signal:
- I have been long for some time now. I am adding here, with a stop loss at 0.80, aiming for 0.82 longer-term.
- The US dollar has rallied on Wednesday to break above the critical 0.81 level.
USD/CHF
The US dollar has rallied a bit against the Swiss franc during the trading session on Wednesday, as we are now above the crucial 0.81 level. This is a pair that I think continues to go much higher, but we are extended, and just like I said yesterday in my analysis, I am looking for some type of pullback to take advantage of value.
Top Regulated Brokers
Ultimately, I think this is a market that, if and when we do continue to see a move to the upside, the 0.83 level could be your target. If we do drop from here, the 0.80 level underneath is a massive floor as it is a psychologically important figure, but it is also an area where we have seen a lot of resistance previously.
Technical Indicators and Currency Dynamics
We are getting ready to see the 50-day EMA cross above the 200-day EMA, which obviously is important for longer-term algo traders as it is the so-called Golden Cross. Ultimately, this is a market that I think we have a situation where, despite the fact that we are overbought, you clearly cannot short this pair due to the fact that we have a certain amount of market memory and a bit of FOMO out there to chase the US dollar.
It's worth noting that the US dollar is strengthening quite drastically against most currencies, and of course, the Swiss franc is almost without a doubt one of the weaker currencies out there. If we start to see the idea of risk appetite picking up around the world, the Swiss franc will be sold off against almost everything. This isn't so much about the dollar for me at the moment; it's more or less about the Swiss franc.
The Swiss National Bank, of course, will intervene if the franc starts to strengthen too much, although we are nowhere near that right now, and ultimately, I think we have turned the corner and are getting ready to break for a longer-term move to the upside, perhaps even as high as 0.88 before it's all said and done.
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