Trading Rotation In The USD/CHF

Last Wednesday, the FED gave us their official stance on inflation, U.S. economic growth, and projections for the Greenback. Since that time, a high degree of uncertainty has crept into the forex, influencing trade of everything from the USD/CHF to AUD/USD. To say the least, if you have been trading currencies over the past week, then you certainly haven’t been bored.

One of the more active pairs has been the Swissie. Investors have moved into Swiss francs in response to a dovish FED and concerns over fallout from the Brexit transition. The result has been a sharp drop in the USD/CHF followed by an extended rotational phase. Let’s dig into the daily technicals and determine the best way to trade the action.

USD/CHF: Technical Outlook

On the USD/CHF daily chart below, a pronounced “L” formation has set up over the past five sessions. The bearish move of last Wednesday has been followed by sideways action and limited ranges. For now, this market is in heavy rotation in the vicinity of .9950-.9925.

Here are the two levels to watch for the near future:

• Resistance(1): 38% Retracement, 0.9982
• Support(1): Swing Low, .9894

Bottom Line: Today’s price action in the USD suggests that the Swissie may be ready to challenge topside resistance. If this scenario unfolds, selling the 38% Retracement (0.9982) is a good way to trade the action.

As long as the Swing Low (.9894) remains uncompromised, I will have sell orders in the queue from 0.9974. With an initial stop at 1.0017, this trade produces 25 pips on a sub-1:1 risk vs reward management plan.