USD/CHF Outlook for April 18-22

After USD/CHF made a deep dive lower, the upcoming week doesn’t feature any important Swiss events, so this week’s outlook will focus on technicals. Here’s an updated technical analysis for USD/CHF.

The Swiss franc enjoyed a solid report by ZEW, showing strength in the economy, as well as a weaker US dollar. Will this continue?

USD/CHF daily chart with support and resistance lines marked. Click to enlarge:

USD/CHF Technical Analysis

USD/CHF began the week with a fall below the 0.9125 line (discussed last week), and couldn’t climb back above it afterwards. After the failed attempt, it continued falling, breaking below 0.90 and even dipping below 0.89 in a failed break.

Looking down, there aren’t too many lines. 0.89, that was tested again just now, is the historic low and provides very strong support. Below, this line, it’s unchartered territory.

Initial resistance is found at the round number of 0.90. This line quickly switched sides and worked as resistance just now. It is eyed by many.

Above 0.90, the piar finds resistance at 0.9125. This is a minor line that provided support twice in recent weeks, but was broken just now. It’s followed by 0.92 that held the pair at the beginning of March and at the end of February.

Moving higher, 0.93 was a bottom early in the year and is another round number. It works as  minor resistance. More significant resistance appears at 0.9370, which capped recovery attempts for quite a few days at the beginning of March.

Higher above we find 0.95 – it worked twice –  in October and December and now works as minor resistance. It’s followed by 0.96, which provided support at the beginning of the year.

Even higher, 0.9780 is a serious line of resistance – the highest level in 2011, challenged twice without success.

I am bullish on USD/CHF.

Despite recent drops on a recovery in oil prices, the Swiss franc is overvalued, and when the dollar will find a bottom, this is one of the first pairs to feel it.

Another opinion: FX Tech Strategy sees the USD/CHF resuming its long term downtrend.

Further reading:

• For a broad view of all the week’s major events worldwide, read the  USD outlook.
• For EUR/USD, check out  the  Euro/Dollar forecast.
• For the Japanese yen, read the  USD/JPY forecast.
• For GBP/USD  (cable), look into the  British Pound forecast.
• For the Australian dollar (Aussie), check out the  AUD to USD forecast.
• For the New Zealand dollar (kiwi), read the  NZD forecast.
• For USD/CAD (loonie), check out the  Canadian dollar