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After sliding steadily in December and the first half of January, can USD/CHF maintain its downtrend?

If you haven’t been watching the pair, you should know that uncertainty over a U.S.-China deal, Trump impeachment-related concerns, and end-of-year profit-taking have all played a role in dragging the dollar against the franc in the last couple of weeks.

But that was last year. This year, the dollar may have a chance to recover some of the 400 pips it had lost in December and half of January.

See, dollar bulls seem to have ignored Uncle Sam’s weak NFP and CPI reports and focused instead on a strong equities market and reports like retail sales.

Meanwhile, the U.S. Treasury Department had just branded the Swiss National Bank (SNB) as a currency manipulator in a recent report and spooked a lot of franc bulls. And Switzerland just printed a weak PPI report. Yikes.

I’m currently watching USD/CHF’s 4-hour chart to see how the pair will react to a solid trend line resistance. As you can see, the potential resistance is juuuust above the big .9700 handle, 100 SMA, and a 61.8% Fib retracement.

USD/CHF 1-Hour Forex Chart
USD/CHF 1-Hour Forex Chart

If USD/CHF shows any signs of bearish pressure around the level, then I could start to short the pair an aim for previous lows near .9600. MarketMilk’s trend indicators are pointing to a “bearish” trend on the 4-hour AND daily time frames and that kinda adds to the confidence to short.

If USD/CHF clearly breaks above the trend line, then I’ll be ready with breakout strategies. I’ll probably end up waiting for a retest before I jump on a long trade TBH. The 200 SMA or .9800 areas look good as initial profit targets if I do end up buying the pair.

What do you think? Can USD/CHF extend its downtrend? Or will it soon see a longer-term reversal?

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