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For this week’s trade idea, I’m looking at this neat tech setup on the long-term chart of AUD/CHF but still waiting to see if fundamentals will confirm a bounce.

AUD/CHF Trade Idea

I’m grabbing this trade setup off Cyclopip’s Weekly FX Crosses Watch since it seems too good to miss! Not only is the pair gearing up for a test of its daily descending trend line, but it might also find a ceiling at the 61.8% Fib, former support zone, and .7300 major psychological mark.

At the same time, stochastic has already made it to the overbought territory and may be ready to resume its move back down. In that case, a return in selling pressure could push the pair back to the swing low.

AUD/CHF Daily Forex Chart
AUD/CHF Daily Forex Chart

Franc weakness has been in play these days, though, and I’m not quite sure if the SNB is up to something sneaky again. After all, SNB head Jordan has been reiterating that the currency is overvalued and that this could put them at a disadvantage in trade. He also suggested that the Swiss economy could be worst-hit in case a trade war escalates.

However, I do think that the Aussie might stand to lose more if China and the U.S. don’t get to hash out their differences anytime soon. Keep in mind that Australia and China share close trade ties, so a huge drop in demand for Chinese products could hit the market for the Land Down Under’s raw material commodities.

Besides, a return in risk aversion could also favor the franc and weigh on the higher-yielding AUD at the same time. I’ll probably hold out until Trump and Xi have their meeting to figure if trade jitters are here to stay. If so, I’m looking to short around the .7300 area with a stop past the trend line and a target at the swing low around .6875.

What do you guys think?


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