USDCHF pushes bears aside
Swissy (USDCHF) has been quietly gaining ground over the last few weeks and we are now at the heady levels of 1.02, a level we haven’t seen since the beginning of 2017. We would expect pretty fierce resistance in the 1.03/1.04 region, a level it attempted to breach in 2015 & 2016 but found it lacking the requisite momentum. Whilst it did then suffer the consequences of a 10 cent fall, it hasn’t really demonstrated too much appetite for a meaningful decline either. Whilst it seems likely that a test of the multi-year highs is on the cards at some point, that point isn’t likely to be just yet. We’d anticipate a pull back of a couple of cents at least in order to be able to build some acceleration up when the market does put the dollar strength to the test. However we should also add a note of caution, and that is that where resistance is expected, traders have a habit of placing Stop Loss orders above them. If there is a breach it is likely to trigger some Stop Loss buying that will add fuel to the fire. If they get triggered then there will be more upside in the scramble to cover. The most likely scenario in this case would be initial acceleration and followed by a loss of momentum as traders try to figure out where this goes next.