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Trade US Dollar vs Swiss Franc; USD/CHF


Jul.20.2013

USD/CHF is Forex Diva’s pick of the day. Let’s take a ride on the Diva’s four-wheel forex drive.

Technical Analysis

USD/CHF – Monthly Chart

The monthly candles have broken above a previous support of 0.96431. In the Ichimoku study, the Tenkan line has crossed above the Kijun line which also indicates a BUY signal. In a long term basis, we could expect more gains in the US dollar against Swiss Franc.

USD/CHF Technical analysis on Monthly Chart
USDCHF Monthly Chart - August 16, 2012

USD/CHF – Daily Chart

The Daily candles are trading above the Ichimoku cloud, signaling more gains. We can expect the pair to be supported at the upper band of the Ichimoku cloud in the 0.97 area.

USDCHF Technical Analysis on Daily Chart
USD/CHF Daily Chart, August 16, 2012

 

USD/CHF – 4 Hour Chart

The 4-hour candles seem to be moving towards a breakout from a symmetrical triangle. A symmetrical triangle is often a continuation pattern that forms during a trend- in our case, it has been an uptrend.

USD/CHF 4 Hour Chart
USD/CHF 4 Hour Chart, August 16, 2012

So what do we do? Zooming in the USD/CHF, the technical analysis suggests a potential rally, or a BUY signal. So from a technical stand point, we could wait for a breakout (while being cautious of a false breakout,) and then ride on the new uptrend and place a buy order.

This was the first wheel of the forex four-wheel-drive. Forex Diva NEVER places an order before carefully analyzing the next 3 wheels.

Fundamental Analysis

A recent U.S. data pushed Treasury yields higher and cooled expectations of further monetary easing by the Federal Reserve. The dollar index (DXY 82.75) which measures the greenback against a basket of currencies, rose to a two-week high of 82.881.

The Dow Jones FXCM Dollar Index (Ticker: USDollar) suggests that US dollar is bullish with a chance of getting stronger against a basket of four currencies: Euro, British Pound, Japanese Yen and Australian Dollar. It broke above key daily resistance at 61.8% Fibonacci extension taken from the June and July highs. This level is now serving as daily resistance.

Dollar Index
US Dollar Index Daily Chart , August 16, 2012

The Swiss Performance Index was little changed today.

Sentimental Analysis

According to the SSI (Speculative Sentiment Index) which is a contrarian indicator, we can expect more USD/CHF gains. The ratio of long to short positions in the USD/CHF is nearly 62%. Short positions are 11.4% stronger since last week, meaning more traders are betting that the pair will drop. This sentiment analysis indicates a movement in the opposite direction of the majority of traders.

Capital Analysis

Things to check before placing a potential buy order:

  1. The spread of USD/CHF with your broker
  2. The amount you are willing to risk losing
  3. A careful leverage based on the amount of your disposable money
  4. A false breakout of the 4-hour symmetrical triangle
  5. Calculate risk appetite and set the stop and limit before placing an order

Happy trading!

 

-by Kiana Danial

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