Trade Watchlist: Will USD/CHF’s Parity Hold as Resistance?

I just spotted a potential long-term trade on USD/CHF! Thing is, the technical setup doesn’t have much fundamental backing. What do you think?

While I’m letting my long USD/JPY trade play out, I decided to look for other possible trades. Hey, I did mention in my Q3 trade review that I had to take more trades, right?

Luckily, Big Pippin pointed out that USD/CHF is having trouble breaking above .9950, which is right below parity levels. In fact, the pair is also hanging around last week’s highs and this week’s open price! The cherry on top of this sweet, sweet setup is an overbought stochastic signal.

USD/CHF: Daily Forex Chart

USD/CHF: Daily Forex Chart

What’s stopping me from jumping in on this range trade is the lack of possible catalysts that might push the dollar lower. Recent reports from Uncle Sam are still supportive of a Fed rate hike in December, you see.

In addition to that, Mario Draghi and a couple of ECB members have just sort of confirmed that they’ll be extending their asset purchases program beyond March 2017. This would likely push EUR/USD lower and by USD/CHF, by correlation, higher.

So, it’s a wait-and-see game for me this week! If the U.S. GDP comes in much weaker-than-expected, then traders might take profits from their long dollar trades and push USD/CHF lower. On the other hand, we could also see a break above parity levels if Uncle Sam’s GDP figures blow their expectations out of the water.

What do you think? Are you looking at this pair, too? How would you trade this setup?

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  • Ari

    Thanks

    • You’re welcome, Ari!

      Hope the setup helped! Looks like it has bounced from the resistance, but it’s also going back up if the lower time frames are any indication. Do you think we’ll see a move all the way to the range support?