USD/CHF: Potential bearish reversal forming at 14-month highs
Matt Weller, CFA, CMT July 13, 2018 5:04 PM
If you were just to look at the where the major currencies are trading relative to yesterday’s US close, you’d think it’s been a pretty quiet day; after all, none of the majors are trading more than 0.3% from the day’s open as of writing. However, that apparent tranquility is masking some big moves (and subsequent reversals) over the last 20 hours.
Pound sterling has gone on a wild ride after US President Trump condemned UK PM May’s Brexit strategy and stated that Boris Johnson would make a great Prime Minister in an interview with The Sun….only to change his tune completely in his recently-completed joint press conference with May. After dropping to test 1.3100 at the European session open, GBP/USD has rallied back to trade above 1.3200.
USD/CHF has seen a similar rollercoaster ride, admittedly without a clear fundamental flip-flop to drive the price action. The greenback hit a peak near 1.0070, its highest level in 14 months against the Swiss franc and a 200+ pip rally off Monday’s lows, ahead of the US session open.
That said, the pair has seen a sharp reversal over the last couple of hours, with rates now trading lower on the day back near the parity (1.00) level. If we close near current levels, the daily chart would show a clear “bearish pin” or “inverted hammer” candle at 1.0055 resistance. Combined with the big divergence in the daily RSI indicator, this price action could signal a near-term top for the pair.
To the downside, the next level to watch will be previous-resistance-turned-support at 0.9990, followed by the rising bullish trend line near 0.9900. The only development that would alleviate the bulls’ near-term caution would be a break and close back above today’s high near 1.0070.
Source: TradingView, FOREX.com
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.