Bottom line: USDCHF long term structure continues to remain bullish against 0.9150/80 lows in March 2020. Bulls might still remain poised to take control back from current price around 0.6250 mark, and push through 0.9800 levels, going forward.

 Fundamental Outlook:

USDCHF has been on the receiving end since July 16, 2020 and has dropped to fresh lows at 0.9238 today before pulling back. The US Dollar has lost against major currency pairs with risk sentiment on the rise lately. Traders might want to remain cautious though, as risk aversion returns.

SPX500 dropped over -1.25% closing in at 3235, Dow Jones down -1.3% closed at 26652 and NASDAQ crashed over -2.5%, closed at 10579. The initial jobless claims print over 1.4 million for the week ended July 17, higher than expected. This might just be the beginning of a larger selloff, we’ve been calling.

GBPJPY seems to have lost in the past 2 trading sessions. The exchange rate has dropped from 136.62 through 135.50 as we prepare to publish the update for the day. The anti-risk Japanese Yen has risen as Global Equity Markets collapsed yesterday. The currency might come under further pressure, going forward.

Technical Analysis:

USDCHF bulls might be down but they are certainly not out yet as the currency drops to 0.9238 lows today. The currency has pulled back to 0.9250 mark as we prepare to publish, as bulls remain poised to push towards 0.9800 levels over the next several weeks.

USDCHF has earlier rallied from 0.9180 through 0.9900 as an impulse wave. Ideally, an impulse wave is followed by a corrective wave in the opposite direction. The currency might have completed its corrective drop at 0.9238 levels today.

USDCHF has dropped to the fibonacci 0.88 retracement levels of the previous rally between 0.9180 and 0.9900 respectively. High probability remains for a bullish reversal from here, if 0.9180 support holds. Also note a doji candlestick pattern might be underway on the daily chart.

Traders might be willing to initiate fresh long positions around current price action (0.9250), with protective stops below 0.9180 and projected targets above 0.9900 respectively. Only a break below 0.9150 changes the above structure.

Prepared by

Harsh Japee, Technical Analyst.

USDCHF Chart

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