Looking to Buy USD/CHF on Weakness

Talking Points

• Cycle analysis points to broader move higher
• Year-to-date high at .9125 now key upside pivot

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Cycle analysis pinpointed the turn at the start of the year in USD against the European currencies. We believe there is a good chance that this turn will lead to a more important USD move higher in the weeks and months ahead. One of the main pairs that we are watching for clues, as it has a tendency to be a leader, is USD/CHF. The rate made its low for 2013 on December 27th at the 127% extension of the January to May advance and has moved steadily higher ever since. The break and recent successful re-test of the 2nd square root relationship of the 2013 low at .8985 is very constructive and points to further gains. A push through the year-to-date high at .9125 in the next few days should kick off another bout of material USD strength. Unexpected aggressive weakness below .8985 would warn that a more prolonged sideways period is due.

USD/CHF Daily Chart: January 16, 2014

Charts Created using Marketscope – Prepared by Kristian Kerr

Key Event Risks in Coming Sessions:

LEVELS TO WATCH

Resistance: .9080 (Gann), .9125 (2014 YTD High)

Support: .9000 (Fibonacci), .8925 (Fibonacci)

Strategy: Buy USD/CHF on weakness

Entry: Buy USD/CHF at .9000

Stop: 1-day close below .8925

Target: .9175

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

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To contact Kristian, e-mail [email protected]. Follow me on Twitter at@KKerrFX.

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