usdchf looks poised for a big move 2685602017

The USD/CHF spent the whole of last week consolidating in a very tight range around that psychologically-important 1.00 handle. The consolidation suggests its coiling for a potentially big move. In the short-term, it all depends on whether we will see a decisive break of the 0.9960/70 support area OR the 1.0020/27 resistance area. Given the overall bullish market structure, we think that the move will more likely be to the upside rather than the downside. Even if it breaks lower, the potential sell-off will probably be limited.

Why do we think the USD/CHF appears more bullish? Well, for a start the 200-day moving average is pointing higher and price is currently above it. This is one of the most objective ways of telling a trend. But even more important is the current structure of price. We can clearly observe from the chart that the USD/CHF has formed a higher high and a higher low relative to its previous swing points. Granted, one can argue that it may have created a false breakout or a double top reversal pattern around the 1.0330 resistance level, which is bearish. Furthermore, the bears could argue that price has broken the last intermediate low at 1.0020, which represents a break in market structure and is therefore bearish. BUT the bulls would point to the fact that the last significant swing low is all the way down at 0.9550, meaning that so long as this level holds, the long-term technical outlook would not be bearish.

If we assume that the long-term trend is not bearish, and focus in the more immediate term, then it is plain to see that the key battle ground is around parity (1.00). As the bulls and bears fight it out here, conservative traders can wait and enjoy the spectacle from the side-lines. Once it becomes clear which group of market participants are winning this battle then that is when conservative traders can step in and take advantage of the potential ride in that direction. Obviously breakouts can and do fail from time to time, which means risk management (stop loss, position size and etc.) should never be forgotten even when there is strong conviction behind a trade. After all, it is all about probabilities in this beautiful and risky game.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.