The US dollar has been trading in a range between 0.92 and 0.94 CHF for the last several weeks. At this point, it looks like the market is trying to come up with some type of basing pattern in order to turn things around. That being said, the US dollar tends to move in the same overall direction against most currencies, so you will need to see US dollar strength in other markets to perhaps confirm any type of breakout to the upside.
That being said, historically speaking, the 0.92 CHF level has been important, and you can see that an argument can be made for the currency pair trading at the bottom of an overall range between that level, and parity. While the Swiss franc is not exactly the most exciting of currency pairs to trade, it does tend to trend for long periods of time.
Looking at the Relative Strength Index, we are not oversold quite yet, but that may be something worth paying attention to. Perhaps one of the main reasons we are not oversold is that we have spent the last couple of weeks grinding sideways, which does tend to work against the validity of that reading. Looking at the MACD, you can see that the histogram and the signal line are getting somewhat close to crossing the zero level, which can be thought of as a potential sign that the market is getting ready to rally.
In a set of like this, it does help to have confirmation in other pairs such as EUR/USD and AUD/USD markets. If both of those show the US dollar strengthening, while this pair breaks above the 0.94 level, it’s very possible that the market could start to take off at this point. While it may be somewhat difficult for some traders to wait for confirmation on a break above the 0.4 level, it is worth noting that if we do in fact break out from that level, the target is 600 pips higher.
Alternatively, if we break down on a daily close below the 0.92 level, then the Swiss franc could start to strengthen against the US dollar again, perhaps reaching down to the 0.90 level which is an area that has quite a bit of history behind it, and of course is a large, round, psychologically important big figure.
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