Bottom line: USDCHF long term structure continues to remain bullish until prices stay above 0.9150 levels. Further, a higher low seems to be in place at 0.9360 as well. Bulls should remain poised to push higher towards 0.9900 at least.
Fundamental Outlook:
USDCHF has managed to rally by over 100 pips in the last 2 trading sessions touching 0.9467 levels yesterday. The return of a possible risk aversion helped US Dollar gain across major currencies. It might just be the beginning, as the US Dollar Index also managed to rally close to 96.40 mark.
COVID-19 infections continue to rise across the US and Asian Countries (India specifically as it crosses the 1 million mark). The worst affected states in the US, Florida and Texas might be considering partial lock downs from today. Global Equity Markets remain vulnerable for a steep decline going forward.
GBPJPY exchange rate remained flat around 134.60, as GBP failed to gain despite an improvement in the UK job market yesterday. Sterling also declined against the USD amidst rising US-China tensions and potential second wave of COVID-19 infections. The US Dollar might regain its dominance if risk assets sell off.
Technical Analysis:
USDCHF might have carved a higher low around 0.9360 on July 09, 2020. Since then, bulls have remained in control and managed to push higher towards 0.9467 levels. The currency is pulling back for now and intraday support is see towards 0.9410 levels.
USDCHF should be looking to push above 0.9900 mark if bulls managed to hold prices above 0.9360 levels. Only a consistent drop below 0.9300 levels might threaten the above bullish structure, and prices might break below 0.9150 interim lows.
USDCHF had rallied from 0.9150 through 0.9900 as an impulse wave. Ideally, an impulse wave is followed by a corrective wave in the opposite direction. USDCHF has also managed to produce a corrective drop towards 0.9360 levels, just below the fibonacci 0.618 retracement.
Most traders might have initiated fresh long positions around 0.9400 levels, with protective stops below 0.9300 mark. The projected targets might be towards 0.9550, 0.9800 and further. Only a break below 0.9150 would change the above structure.
Prepared by
Harsh Japee, Technical Analyst.
USDCHF Chart
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