USD/CHF: trade within the wedge

By Mark Jensen

USD/CHF moves up for a second week, approaching the 2013-2014 downward-sloped trend line (currently around $0.8900). US dollar gained some ground on the back of rather positive statistics. However, the upside will likely be limited until the geopolitical tensions in Ukraine end.

Technically, USD/CHF is trading in the “falling wedge” pattern since April 2013. Break above the 0.8860 resistance will open the way towards the wedge resistance around 0.8900, but this level is expected to cap for now. If the buying pressure isn’t strong enough, the pair will stay within the wedge and slide to 0.8600 in a few weeks.

However, a drop below 0.8600 looks unrealistic. Strong currency has already hurt the Swiss economy in Q1 and the government won’t let the things worsen. Last month the IMF advised the Swiss National Bank to introduce negative interest rates on the banks’ excess reserves in case of renewed strong pressures on the franc. 

Trade ideas

Short-term: Buy at 0.8860 with a target of 0.8900 and a stop at 0.8840

Medium-term: Sell limit at 0.8900 with a target of 0.8620 and a stop at 0.9005

Chart. H4 USD/CHF


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