USD/CHF: Fibonacci Resistance In View

Thus far in the forex session, the USD is in a relative holding pattern against the majors. Currency players are proceeding with caution ahead of the coming FOMC Minutes release. However, today’s late-U.S. session is likely to bring some fireworks to the forex. For the USD/CHF, that means a key Fibonacci resistance level may come into play.

On the heels of this morning’s disappointing MBA Mortgage Applications, a positive set of Existing Home Sales (July) figures hit newswires a few minutes ago. Here is a quick look at the data:

Event                                                             Actual     Projected    Previous

Existing Home Sales (MoM, July)               5.42M        5.39M            5.29M

Existing Home Sales Change (MoM, July)  2.5%           2.5%             -1.3%

For the most part, Existing Home Sales (July) came in right on schedule. Nonetheless, be on the lookout for these numbers to fall off sharply in August. If the lagging MBA applications are any signal, U.S. real estate may be headed for an early fall/winter downturn.

Fibonacci Resistance In View For The USD/CHF

Just above .9850, the 62% Current Wave Fibonacci retracement sits as topside resistance. If traders decide that July’s FED rate cut is likely a “one-off” following today’s FOMC Minutes, this level may come into play quickly.

Here are the levels to watch in the USD/CHF for the remainder of the session:

• Resistance(1): Bollinger MP, .9814
• Resistance(2): 62% Fibonacci Retracement, .9853
• Support(1): Daily SMA, .9757

Bottom Line: If we see a bullish bump in the USD/CHF during today’s late forex session, shorting the 62% Fibonacci retracement isn’t a bad way to play the action. Until elected, I will have sell orders in queue from .9849. With an initial stop at .9877, this trade produces 25 pips on a slightly sub-1:1 risk vs reward ratio.