USD/CHF Extends Correction As Swiss Trade Data Weighs

The US Dollar (USD) once again fell against the Swiss Franc (CHF) on Tuesday, dragging the USD/CHF to less than 1.8950 following the Switzerland’s trade balance report. The sentiment remains very bullish due to Higher High and Higher Low in the recent wave.

Technical Analysis

As of this writing, the pair is being traded near 0.8941. A major support can be seen around 0.8907, the low of the huge bearish pin bar which was emerged earlier this month ahead of 0.8869, the 50% fib level and then 0.8829, the 61.8% fib level.

usdchfdaily

On the upside, the pair is likely to face a hurdle near 0.9036, the high of the bearish pin bar as demonstrated in the above chart. A break and daily closing above the 0.9036 resistance area will spur a renewed buying interest, validating a fresh upside rally above the 0.9100 handle.

Switzerland Trade Balance

The trade surplus of Switzerland increased surprisingly to CHF2474 million during May as compared to revised CHF2448 million in the month before, a government report revealed today. Analysts had predicted an increase to CHF2707 million hence the actual outcome upbeat the median projection. Generally speaking, higher surplus is considered positive for the economy, so better than expected reading spurred bearish momentum in the price of USD/CHF.

Consumer Confidence

The Consumer Board of the US is due to release the consumer confidence report today. According to the average forecast of different economists, the consumer confidence increased to 83.5 points in June as compared to 83.0 points in the month before, better than expected actual outcome will be seen as bullish for the pair and vice versa.

Conclusion

Considering the overall technical and fundamental outlook, selling the pair around the current levels appears to be a good strategy, the stop should be placed around the swing high of the bearish pin bar as described above. 

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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