Trade Watchlist: USD/CHF’s Flirting With A Channel Resistance!

Not planning on trading in the next couple of days, but I just thought you guys might appreciate this cool downtrend setup on USD/CHF’s daily chart.

As you can see below, USD/CHF is having trouble breaking above the 1.0100 area of interest.

And why not? the level lines up with not only last week’s high, but also the 100 SMA and the top of a falling channel that’s been controlling the pair’s long-term trend since November last year. The sweet, sweet cherry on top of the bearish setup is an overbought stochastic signal.

USD/CHF Daily Forex Chart

USD/CHF Daily Forex Chart

Fundamentally, it makes sense for the dollar to lose some pips against the franc. Trump’s attention on Syria and North Korea, for one, suggests that he’s about to pick fights with other nations.

This will take away his focus on his tax and fiscal policies, which the Fed and other market analysts have more or less priced in over the last couple of months. And then there’s the teeny tiny bit factor of a potential war, which causes uncertainty all around the markets.

Last but not the least is a possible profit-taking after the Fed’s latest policy statement. Based on the release and the members’ speeches, it looks like they’ll stop at three rate hikes this year.

Still, I’m not sure if I should sell at current prices. Pip Diddy has often pointed out that the SNB is hard at work in limiting the franc’s gains. In addition, overall risk aversion could drive investors to the “safe haven” dollar even as the U.S. participates in geopolitical skirmishes.

If I were to trade this, I’d probably wait for a legit momentum before jumping in. How about you? What do you think of the setup? Will USD/CHF bounce from the falling channel resistance? Or will it go on its merry way up the charts?

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See also:
Latest Weekly Trading Prep
My Q4 2016 Forex Trade Review and Reflections
HLHB System’s 2016 Performance Summary
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