Not a lot has changed for the USDCHF since I last covered the pair on September 20th. However, I want to do a quick recap because I still believe that the US dollar is set to strengthen in the coming weeks and months.
It’s apparent from the chart below that the USD recently found support against the Swiss franc at a familiar level. The 0.9650 handle has been a factor since July of last year and continued its influential ways just last month.
While the USDCHF may present an opportunity in the coming weeks, it’s important to understand that the current twelve-month consolidation is not conducive to catching a lasting move.
For this reason, I’m staying on the sidelines until we get a daily close above channel resistance that extends from the current 2016 high at 1.0255. Only then will I consider a buying opportunity as there will be a greater chance of following through to the upside.
With that said, the fact that the pair has been coiling tighter since the beginning of April suggests that the ensuing breakout could be quite volatile. It also serves as a hint that we may not need to wait much longer to find out what will come of the consolidation that has consumed all of 2016.
The first resistance level that would enter into play following a bullish breakout is the 0.9950 handle followed by 1.0090. Note that parity could also attract offers given the psychological influence of the level.
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