Search ForexCrunch

The Swiss franc  showed little change against the dollar this week, closing just shy of the 0.92 level.  The upcoming week is very quiet, with only  one release.  Here is an outlook for the Swiss events, and an updated technical analysis for USD/CHF.

As the Greek government prepares to implement the bailout deal, the major  eurozone  players can breathe a sigh of relief. Or can they? The “contagion” effect of the financial crisis that paralyzed Greece may hit Portugal shortly, and the markets continue to reflect the financial uncertainty gripping the continent.

Updates: Some optimism from Brussels about Greece sent the pair lower, to dip under 0.91. When worries began emerging, the pair climbed a bit higher. Here is how to trade the Swiss trade balance with USD/CHF. The pair is floating around 0.91. Doubts about the Greek deal float, but the Swiss franc is relatively stable. The calm in Greece and some positive figures from all over the world (including Germany) weakened the pair, and it dropped to just above 0.9040.

USD/CHF daily graph with support and resistance lines on it. Click to enlarge:  

  1. Trade Balance: Tuesday, 7:00. This is an important indicator for traders, since an increase in  trade balance means that foreigners are  purchasing more francs to buy Swiss goods.  Last month’s reading  of 2.07B was well below the market forecast of  2.85B, and the markets are predicting a further drop for February, down to 1.95B. If the markets are correct in their forecast, this would  represent the third straight drop in the trade balance, clearly not a positive trend for the fragile Swiss economy.

USD/CHF Technical Analysis

USD/CHF  touched the 0.93 level, but was little changed over the week.  The pair opened at 0.9137, and  quickly dropped to a low of    0.9102. The pair rebounded and climbed as high as  0.9300, just below the resistance line of 0.9306 (discussed last week). The pair closed the week at 0.9197.

Technical lines from top to bottom:

We begin with 0.9780, a strong resistance line, last tested by the pair in February 2011.  Below, is a resistance line at 0.9636. This is followed by 0.9510, which was tested earlier this month, and is providing strong resistance. Below, is the line of 0.9412, which earlier in the month was acting as support, and is now in a resistance role. Next is the weak resistance line of 0.9306, which was breached in January.  This is followed by a weak resistance level at 0.9250, which the pair briefly broke through this week. It could be tested on any  push by the dollar. Below, 0.9204 has been an important line since November 2011, providing support until very recently.

The line of 0.9120 has been repeatedly tested in February, as the  dollar has weakened and the pair has moved downwards. Next, 0.9085 is providing weak support and could be tested on  a further downswing by the pair.  The  psychologically important  round figure of 0.90 is providing strong support for now.  The support level of 0.8950 has provided firm support since November 2011. This is followed by 0.8850, which is providing the pair with major  support. The final support line for now is 0.8768, which has not been tested since last November.

I am  neutral on USD/CHF.

USD/CHF continues to trade in range,  making some slight pushes in both directions.  Uncertainty continues to be the name of the game as far as the financial  crisis in the eurozone,  as it  is clear that  Europe’s troubles are far from over, despite the Greek bailout.

Further reading: