USD/CHF Forecast December 21, 2011, Technical Analysis

USD/CHF had a bearish day on Tuesday as the Dollar got sold off in general. However, the pair only managed to sell off to the all-important support level at the 0.93 handle. We have been waiting to see if this mark would get tested as support since it was broken through as resistance, and it produced a hammer-like candle for the session.

The move to 0.95 was tempered by the announcement form the Swiss National Bank on Thursday of last week. In this statement they didn’t mention lifting the “floor” in the EUR/CHF as expected, and as a result – traders that were speculating that the Franc would be devalued were burnt. However, it appears that the momentum players have been taken out, and this uptrend could continue from this point now.

The Swiss economy is going to suffer over the next year or so. The #1 export venue for the Swiss is Europe, and that area is almost certainly going into recession for 2012. The rising value of the Dollar against the Franc is partly because of this, but also because the Dollar enjoys a “safe haven” status around the world. With both of these factors in play, it is hard to think that this pair will fall any significant amount over time. Adding to the bullish case is that fact that the Swiss could very well do something to continue the move against their currency.

The 0.95 level will have to be overcome in order to continue the grind higher, but this level looks set to give way. In fact, one has to wonder whether or not it would have if it weren’t for the announcement as that is where the pair had traded right up until that communiqué came out. With this in mind, we are buying a rise in this pair, and dips as well for the short term. Also, a breaking above the Tuesday highs has us buying. The longer-term outlook has us even more bullish. Because of this, we will not sell this pair at all until we see the stance out of Zurich change over time, something that isn’t going to happen anytime soon.

USD/CHF Forecast December 21, 2011, Technical Analysis

Written by FX Empire