Swiss Franc Forecast: USD/CHF Defends Critical Support– Bears on Notice

Swiss Franc Technical Forecast: USD/CHF Weekly Trade Levels

• USD/CHF respond to lateral support for the fourth time this year, with price once again defending a key pivot near ten-year lows
• USD/CHF immediate decline vulnerable- risk for downside exhaustion / price inflection
• Traders should stay nimble into next week’s labor market data, with Fed commentary likely to drive sentiment after weeks of limited U.S. economic releases
• Resistance 8103, 8153 (key), 8354-8416 – Support 7882 (key), 7769, 7669

The Swiss Franc is back in focus, with USD/CHF defending critical lateral support near ten-year lows for the fourth time this year. While the broader trend remains tilted to the downside, the immediate decline appears vulnerable above this zone as traders look for direction into the weekly close. Battle lines drawn on the USD/CHF weekly technical chart.

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Swiss Franc Price Chart – USD/CHF Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CHF on TradingView

Technical Outlook: In last month’s Swiss Franc Technical Forecast we noted that that, “USD/CHF is testing lateral support again this week and while the broader outlook remains tilted to the downside, the immediate decline remains vulnerable while above. From a trading standpoint, rallies should still be limited to 8040 IF price is heading lower on this stretch with a close below 7882 needed to mark downtrend resumption.” Price rallied nearly 3.2% off those lows in the following weeks with USD/CHF registering a weekly close high at 8051 last week before plunging lower again.

The decline tested key support for a fourth time this week at the 1.618% extension of the May decline at 7882. This level converges on the 25% parallel of the multi-year downtrend, and the focus remains on possible inflection off this mark in the weeks ahead. A break / weekly close below this key pivot zone would threaten downtrend resumption with subsequent support objectives see ad the 2011 low-week close (LWC) at 7769 and the 2011 low close at 7669. The next major technical consideration rests with 78.6% retracement of the 2012 advance, which converges on the lower parallel into the start of December at 7537.

Resistance is eyed at the 61.8% extension of the broader 2022 decline at 8103 and is backed by the 23.6% retracement of the yearly range at 8153. Note that the median-line converges on this level into the close do the year and a breach / close above this slope would be needed to suggest a more significant low in place and that a lager trend reversal is underway. Subsequent resistance objectives eyed at 8354-84416- a region defined by the 38.2% retracement, the 2024 low, the 2023 low-week close, and the 2024 yearly open.

 

Bottom line: USD/CHF has responded to lateral support for the fourth time this year and the immediate decline remains vulnerable while above this pivot zone. From a trading standpoint, a good region to reduce short-exposure / lower protective stops- the focus is on a breakout of the 7882-8103 range for guidance with a weekly close below needed to mark downtrend resumption.

Keep in mind that the economic docket remains light and although the government has now officially reopened, it will take time for key data releases to catch up after such a prolonged pause. Stay nimble into labor market updates next week with the ADP employment figures on Tuesday and weekly jobless claims on tap Thursday. In the meantime, a continued flurry of Fed speakers are scheduled throughout the week, and traders will look for insight into how policymakers view the rate path into year-end after weeks of limited data. Note that interest rate expectations for December have plunged with Fed fund futures now pricing the probability of a cut next month below 50%. I’ll publish an updated Swiss Franc Short-term Outlook once we get further clarity on the near-term USD/CHF technical trade levels.

USD/CHF Key Economic Data Releases

 

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--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex