USD/CHF fell during the Thursday session as the Dollar got sold against many currencies around the world. The later hours saw a bounce though, and the resulting candlestick formed a hammer. This bullish sign also managed to happen right at the 0.92 level, an area that we were watching.
This pair has been very bullish until recently, and the fundamentals seem to back the move up. The Swiss are working against the Franc, and as long as a central bank is willing to sell the currency off, it is thought to buy it. With the Franc being so heavily worked against, it makes sense that the chart has been rising. Adding to that, the United States has been reporting better economic statistics lately, and as a result the Dollar has been strong in general. Also, the EU is going into recession, so the Swiss will have trouble selling their products to their neighbors.
The 0.92 level has been resistance and support in recent times. With the shape of the candle being at this point in time, it makes sense that buyers may step back into the market and try to push prices higher. The pair should also grind as the Franc gets closer to the 1.20 mark against the Euro. This area is one that the Swiss National Bank has put a floor in, and they will almost have to intervene if that pair tests the level. If that happens, the Franc will sell off against all currencies, the Dollar included.
So while the Federal Reserve has said it would keep rates low until the end of 2014 at least, this pair could very easily continue to climb at the same time. The breaking of the recent top could see this pair even turn into a long-term buy and hold trade. This market doesn't move overly fast, so one of the prerequisites is the ability to be patient with a trade. The range is much slower than a lot of other pairs.
We are buying the market on a break of the top of the Thursday hammer, as it would show a breaking of the bearish pressure from the selling that has been done the previous 24 hours. We aren't interested in selling at the moment.
USD/CHF Forecast January 27, 2012, Technical Analysis
USD/CHF Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3