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Now that the BOC has had its say, I’m thinking that the Loonie can be able to hold on to its gains on expectations of more hikes down the line. Think these support levels might hold?

Long CAD/CHF Idea

Happy Pip spotted this CAD/CHF resistance break a couple of months back, but the pair barely gained much upside momentum then. I’m thinking that this nth retest might be the charm, especially since the Loonie is backed by strong fundamentals and higher crude oil prices.

CAD/CHF 4-hour Forex Chart
CAD/CHF 4-hour Forex Chart

Zooming in to the shorter-term time frames shows that this pair is moving inside an ascending channel and is currently testing support. Now this might be a prime entry area for me!

CAD/CHF 1-hour Forex ChartCAD/CHF 1-hour Forex Chart
CAD/CHF 1-hour Forex Chart

It looks like the post-BOC volatility has calmed anyway, and the parting words from BOC officials Poloz and Wilkins during the presser signaled scope for further tightening. However, it’s also important to note that the central bank highlighted the uncertainty stemming from NAFTA.

This suggests that negative reports surrounding NAFTA negotiations, like maybe more Trump tantrums, could be Loonie bearish while positive updates such as a potential deadline extension would likely be bullish.

Apart from that, I’m counting on more risk appetite and sustained gains in oil prices to boost the positively-correlated currency. At that same time, this could dampen demand for the lower-yielding franc.

Another potential concern, though, is dollar weakness that usually leads to a boost for safe-haven alternatives like the yen and Swiss franc. But with a number of Fed officials acknowledging the potential boost to growth from tax cuts and supporting the idea of three rate hikes this year, the U.S. currency could regain its luster and keep the franc lagging behind.

I’m eyeing a long position around the .7750 channel support with a tight stop below the .7700 area of interest and a profit target at the channel resistance around the .7950 level. What do you guys think?

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