USD/CHF Pressing Validity for the Uptrend
The USD/CHF uptrend is still fresh in that it is not established and the extent to which the 34EMA Wave will be respected is still unknown. That means that today’s pullback which currently had a daily pip movement range of 123 pips is on the very high end of historical price movement.
This is the second day of such a dramatic move lower when considering that yesterday the pip range was 190 pips. Certainly the U.S. dollar’s weakness is mainly the fuel for the move lower – interesting also then is the the fact that the dollar is pulling back sharply today through key, near-term support that was at 83.50. For the USD/CHF’s uptrend to continue, the dollar will have to stabilize so the question will be where? For now the U.S> Dollar Index is finding support above 83.00 and the 50DMA. This bodes well for USD/CHF bulls.
The USD/CHF entry has an advantage today that it didn’t have yesterday: The buy is triggering at a lower level but still within a valid uptrend and still within the support of the 34EMA Wave. Even if this is a market trend transition, the strategy would be to fade (buy) the weakness on an oversold Stochastic, so either way I am looking to get long based primarily on the expectation for the greenback to be supported.
The entry is valid at 0.9550 – taking advantage of the major psychological level support. For traders more risk averse, use a cheated-in stop loss below today’s low which would put the order at 0.9515. I would prefer to tack on another 20 pips to my potential loss and be able to use the “00” level and a 0.9490 stop loss; it’s an individual choice. Follow-through to the upside will depend heavily on the greenback and while there will be a hurdle at today’s high (0.96499) look to the 0.9690 level as a profit target and then 0.9790.
Keep an eye on equities since if risk comes off the table, the franc could strengthen as the safe haven play gets put on. The expectation is that the dollar is ready for a pullback but should be supported; traders will accept this as the beginning of what could be a volatile Summer of trending but ugly markets.
About Raghee Horner
Raghee Horner is the Chief Currency Analyst for IBFX. She has written three books published by John Wiley & Sons including her latest, “Forex on Five“. Raghee is a featured contributor at TradeStation, ForexFactory, BabyPips, Investing.com, and is a blogger for the StockTwits Network. Raghee runs a popular morning chat, trading commentary, and alert service
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