USDCHF: Forex Technical Analysis – Preparing for inflation data in Switzerland

February 12, 2018

By IFCMarkets

Preparing for the publication of inflation data in Switzerland

The US dollar index rose by 1.7% in a week and demonstrated a maximum increase in 15 months. Perhaps its strengthening will continue in relation to some currencies as well. Will the USDCHF grow?

Their increase indicates the strengthening of the US dollar against the Swiss franc. The main reasons for the US dollar growth are the expectations of the Fed rate hike at the meeting on March 21, 2018. Currently, it is 1.5%, while the rate of the Swiss National Bank is negative and equal to minus 0.75%. The difference in rates can contribute to the strengthening of the dollar. Note that on Friday, February 9, not so good data on unemployment for January came out in Switzerland. It rose to 3.4% from 3.3% in December. The next significant economic statistics in Switzerland will be published on February 12 – inflation for January. It is expected be 0.8% as in December year-over-year.

USDCHF


Get our Weekly Commitment of Traders Report: - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.




Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter






On the daily timeframe, USDCHF: D1 went to the top of the downtrend. The further price increase is possible in case of the publication of positive economic data in the US and negative in Switzerland.

  • The Parabolic indicator gives a bullish signal.
  • The Bollinger bands have widen, which indicates high volatility.
  • The RSI indicator is below 50. It has formed a positive divergence.
  • The MACD indicator gives a bullish signal.

The bullish momentum may develop in case USDCHF exceeds the last high at 0.947. This level may serve as an entry point. The initial stop loss may be placed below the last fractal low, the minimum for 2 and a half years and the Parabolic signal at 0.925. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level at 0.925, without reaching the order at 0.947, we recommend cancelling the position: the market sustains internal changes that were not taken into account.

Summary of technical analysis

Position Buy
Buy stop Above 0,947
Stop loss Below 0,925

Market Analysis provided by IFCMarkets