USD/CHF – Updated Analysis

Following up on the analysis of the dollar versus the Swiss Franc, there was a wick rejection of the 78.6 indicated in yesterday’s blog post but towards the end of the US session, the dollar gained strength ultimately pushing this pair above the trend line drawn.


Revisiting the daily time frame above, we can see that at the close of market last night a morning star pattern was printed indicating upside movement, but structure has not yet been broken to the upside on this time frame. The current candle rejected the high of 0.9370, and if we have a daily closure back below the trend line, I expect further downside on this pair.


On the 4 hour chart above, we can see that  yesterday’s sell set-up was invalidated once the trend line was broken to the upside however if you draw the fib from the second touch of the trend line, which is also where the most recent bearish drive started, down to the low we had a rejection off of the 78.6 and price is looking to be break back below the trend line but I would wait for the candle closure below the trend line to confirm further downside movement.


On the hourly chart, it is evident why a break below the trend line is crucial for the downtrend to continue because now price looks to be retesting the trend line for a bullish move. Looking at the candle stick patterns we had an evening star pattern off the 78.6 shown by the highlighted region with price currently rejecting the trend line with a doji forming. If price breaks and closes above the highlighted region, it will invalidate this analysis.

From a fundamental perspective, there are a few data releases for the dollar later this afternoon. The most important being the ADP Nonfarm Employment Change which measures the change in the number of employed people in the US excluding the agricultural sector. The reason so much importance is put on this data release is because it is a key economic indicator for what to expect for the governments NFP report which is released every first Friday of the month. There will also be Factory Orders, Crude Oil Inventories as well as Cushing Storage and Inventories reports released later today which will be important to consider as well. When looking for shorts on this pair, one would hope for negative data releases to push the dollar and this pair to the downside.

Remember when trading a dollar pair that it is important to analyse the DXY along with the pair you are looking at for further confluence. Always stick to your personal trading plan and use the correct risk management when executing trades. Subscribe to receive blog posts sent directly to your e-mail.

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