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USD/CHF was in a slump for most of November, but with bullish catalysts now in the works, is the third quarter rally in ready to resume?

Watchlist: USD/CHF to Resume Uptrend?

USD/CHF 4-Hour
USD/CHF 4-Hour

The past few week’s haven’t been kind to the Greenback thanks to a slew of catalysts, most likely the Fed’s dovish comments on their inflation outlook, to weak CPI & durable goods data, and possibly even on geopolitical developments like investigations of Russia’s possible involvement in the U.S. elections.

But the bears may not have much of an argument in December with a new Fed Chairman on the way, and more likely, growing optimism that tax reform is getting close after the U.S. Senate approves their version of the bill this past weekend.

All together, it looks like forex traders are back on the bullish train in the Greenback, evidenced by the support around the .9750 handle in USD/CHF, which also happens to be an area of previous strong interest and the 50% Fibonacci retracement of the swing move from .9450 to 1.0050.

So, I’m looking to go long USD/CHF because of the strong situation in the U.S. and with a higher probability of tax reform coming, versus the CHF which usually doesn’t have economic or geopolitical drivers. But with the market now testing the lower highs and stochastic showing potentially short-term overbought conditions, I’m in watch mode now for two technical setups:

  1. A sustained break higher of the lower highs, which may draw in more buyers
  2. A retest of the strong support area around .9750 and another round of strong buying support

So, I’ll likely jump into a live position if either of those two technical conditions are met and the narratives/economic data does not change dramatically. And if I do jump in, I’ll only be risking only 0.50% of my account as always and post up another update of my plan if it does happen. Stay tuned and until then, good luck and good trading!

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