Top Story

USD/CHF: Risk appetite turns sour

Since the US stock market opened earlier, risk appetite has turned a bit sour. Safe-haven gold, yen and franc have all been supported by weakness in the stock markets, with the benchmark US indices turning red after a green open. Concerns over economic growth is back after those disappointing Chinese figures were released over the weekend. The dollar also turned lower in part because of ongoing concerns about the economic impact of the US government shutdown, but mainly because of exhaustion of its bullish trend.

The Federal Reserve has already indicated it will stop tightening interest rates for a while, so it was fundamentally difficult for the greenback to sustain its rally in the first place. Although a bit early, this could potentially be the point where the dollar may resume its bearish trend. But at the very least we are expecting to see some downside follow-through for the buck.

Below is our featured chart of the day, showing the daily price action on the USD/CHF. Along with other dollar pairs, it is currently displaying a bearish reversal pattern. Specifically, the USD/CHF is showing a bearish engulfing candle just below parity. If this is a genuine reversal pattern, as we think it might be, then the Swissy could potentially head sharply lower over the coming days. The next levels of potential support come in at 0.9910 then at 0.9850. Short-term resistance is seen around 0.9960.


Source: TradingView and FOREX.com.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

Open an Account