USD/CHF is among the top potential movers in spot FX when the Fed gives its statement later today, giving traders both short-term and longer-term setups, and catering to both bullish and bearish biases.
Volatility & Trend Setups on USD/CHF
On the four hour chart above of USD/CHF, we can see the bulls have been in solid control throughout the rising bond yield narrative that’s been dominating the global financial markets since February.
Price action in the pair has calmed down this week, along with the rest of the markets as traders anxiously await the latest monetary policy statement from the Federal Reserve today.
That makes the tight range on USD/CHF a candidate for a consolidation breakout play, making a straddle play an entry strategy to consider if looking for a short-term play for a rise in volatility and momentum.
For the longer-term players in USD/CHF, the probabilities are still in favor of the bulls, and if the Federal Reserve refrains from taking action to slow down the rise in longer-term yields, then the odds are still in favor of the Greenback outperforming the Swiss franc in the medium term time frames.
In that scenario, we’ll be looking for a buy on USD/CHF, preferably after a pullback. If we see the market retest the Fibonacci retracement area and bullish reversal patterns form, we’ll look to take a long position for a one to three month swing play.
If USD/CHF breaks higher in that scenario, we’ll be watching for a bit to see if the momentum holds before considering a long position. A “buy-the-rumor, sell-the-news” scenario could play out where a pop higher is short-lived, leading to profit taking and a pullback.
What do you all think? Is the upcoming Fed statement going to set off fireworks or be a snoozer? Is USD/CHF’s rally set to go higher or is the top? Let me know in the comments section below!
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.