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USDCHF looking to break recent downtrend

Market Analysis

USDCHF, Daily                 

The dollar is at moderately softer levels in quiet early-week trading. The narrow USD index is at 97.13 after closing out on Friday at 97.24, off the two-week high at 97.47. EURUSD has been plying a narrow range near 1.1200, below seven-month highs at 1.1285, consolidating the modest losses seen following the ECB’s policy guidance and inflation forecast downgrade last week. USDJPY has opened the week with JPY well bid and below 110.00 with next stop Friday’s eight-day peak at 110.81 and above last week’s seven-week low at 109.11.  USDCHF , after a number of false starts may be looking to recover and I took a long position this morning at 0.9674 with target 1 just north of the 20 day moving average at 0.9724 and target 2 at the next fractal high and round number at 0.9800.

The pair appear to have confirmed the Tweezer bottom from Wednesday (June 7) and followed with 3 white soldiers to close the week strongly and break above the recent fractal low. The parabolic SAR turned positive on Friday (June 9) and although this remains against the higher time frame trend a retrace to target 1 is probable. Consolidation is also possible at current levels as the pair remain in the lower half of the Bollinger band  and the RSI at 40 is neutral to negative. A breach and break of the recent fractal low at 0.9610 will negate this position.

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Stuart Cowell

Senior Market Analyst

HotForex

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