Swiss Franc Short-term Outlook: USD/CHF Rally Nears Make-or-Break Resistance
USD/CHF has staged a strong recovery from multi-month support and is now approaching a key resistance zone. The reaction here may set the next phase of the move.
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Swiss Franc Technical Forecast: USD/CHF Short-term Trade Levels
- USD/CHF rebounds off key multi-month support base- rallies more than 2.2% off December low
- Inflection risk builds as price confronts the November trendline and a key Fibonacci extension- a pivotal test for the bulls
- Resistance 8044 (key), 8101, 8125- Support 7988 (key), 7956, 7927/30
USD/CHF has mounted a meaningful recovery from a well-defined multi-month support base, with the rebound now extending into a key resistance zone as the new year gets underway. This area now represents a decisive test for the rally, as a sustained move higher would suggest the recovery has room to broaden, while failure to clear resistance would leave the pair vulnerable to a deeper corrective phase. How price behaves around this zone should provide important guidance on the durability of the move in the days ahead. Battles lines drawn on the USD/CHF short-term technical charts.
Review my latest Weekly Strategy Webinar for an in-depth breakdown of this USD/CHF setup and more. Join live on Monday’s at 8:30am EST.
Swiss Franc Price Chart – USD/CHF Daily
Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CHF on TradingView
Technical Outlook: USD/CHF rebounded off confluent support into the close of the year at the 7872/82- a region defined by the July / October / November lows, and the 1.618% extension of the May decline. The pair has held above this key pivot zone for nearly six-months with the recent recovery now extending more than 2.2% off the December low. The advance came within striking distance of resistance this week at the 61.8% extension of the September advance at 8044. Note that the November trendline converges on this threshold over the next few days and the focus is on possible inflection off this zone next week.
Swiss Franc Price Chart – USD/CHF 240min
Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CHF on TradingView
Notes: A closer look at Swisse price action shows USD/CHF trading within the confines of an ascending pitchfork extending off the December low with an embedded channel (red) guiding the most recent advance. Note that the upper parallel further highlights resistance into 8044 and a breach / daily close above this threshold would be needed to fuel the next leg of the advance. Subsequent resistance objectives are eyed at the 200-day moving average (currently ~8060), the November high-day close (HDC) at 8101 and the August high-close at 8125.
Initial support rests along the median-line, which converges on the December 17 swing high at 7988 next week. Losses below this slope would suggest a more meaningful correction is underway within the late-December uptrend. Subsequent support rests at this week’s low near 7956 with a break / close below the objective yearly open at 7927 needed to suggest a more significant high is in place and a larger trend reversal is underway.
Bottom line: USD/CHF is testing near-term uptrend resistance, and the risk builds for possible exhaustion / price inflection while below the November trendline. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stop- losses should be limited to the median-line IF price is heading higher on this stretch with a daily close above 8044 needed to fuel the next major leg of the advance.
Keep in mind the 56th annual World Economic Forum convenes in Davos, Switzerland next week with President Trump slated to speak on Wednesday. The November read on Personal Consumption Expenditures, the Fed’s preferred inflationary gauge, are slated for Thursday. On the back of this week’s better-than-expected CPI print, the data will be critical in determining the timing of the central bank’s next rate cut. Markets are currently pricing a 61% probability for the first rate cut of the year to be at the June decision, and a slower pace of price growth has the potential to bring expectations closer to April and could hamper the recent USD rally. Stay nimble into the shortened holiday week and watch the close for guidance here. I’ll publish an updated Swiss Franc Weekly Forecast once we get further clarity on the longer-term USD/CHF technical trade levels.
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--- Written by Michael Boutros, Sr Technical Strategist
Follow Michael on X @MBForex
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