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The  Swiss franc  had another volatile week across the board and made gains against the dollar. The upcoming week consists of two events. Here is an outlook for these events, and an updated technical analysis for USD/CHF.

The improvement in the global sentiment weakened the US dollar and this also helped the Swiss franc. USD/CHF closed lower after three weeks of gains.

USD/CHF daily chart with support and resistance lines marked. Click to enlarge:USD CHF Chart October 17-21 2011

  1. Trade Balance: Thursday, 6:00. Switzerland usually enjoys a nice trade surplus. A large squeeze to only 0.8 billion francs was seen last month, after a few months above 2 billion. A rise back towards 2 billion is likely now.
  2. ZEW Economic Expectations: Thursday, 9:00. The German institute surveys analysts and investors regarding their future expectations. The results have significantly deteriorated in recent months, plunging within negative territory, down to -75.7 last month. A small rise is expected now, but the number will likely remain negative, reflecting pessimism.

* All times are GMT.

USD/CHF Technical Analysis

Dollar/Swiss began the week with a sharp downwards move. After 0.9145 was lost, a recovery attempt failed to conquer this line and the downfall resumed. The  loss of the round 0.90 line (mentioned last week) sent it lower, eventually closing at 0.8911.

Technical lines from top to bottom:

We start from a very high line, but given the current volatility, anything is possible. 0.9783 was a very stubborn peak back in January and in February of 2010 (double top). The next distant line is the round number of 0.96, which provided support at the same period of time.

0.9505 is minor resistance after serving as such at the beginning of 2011.  0.9370 was a tough line of resistance back in February and was also approached in April. It is strong resistance.

0.9295 capped the pair in March and earlier worked as support. Although it was run through, the pair didn’t manage to conquer it, so it prevails.

The peak of 0.9182 reached in September is the next line. It also worked as support in February and March and is strong. It is closely followed by 0.9145, which provided support at the beginning of October.

The more recent cap of 0.9085 is another minor line of support.  The round number of 0.90 is an important line. It capped the pair on a recovery attempt in April and was an important separator in September. It will be tested on any downwards move.

Below, 0.8930 served as support in April and also worked as resistance in September – more than once. It is strong support.  The round number of 0.88 is minor support beneath.

Further down, 0.8650 worked as support back in September and is an important stepping stone. 0.8550 capped the pair back in June and July.

0.8460 is a minor line after providing support in May. The final line for now is 0.8330 which was a strong support line.

I am neutral on USD/CHF.

The improvement in the global mood weakens the dollar against the franc, but the chances of another intervention to weaken the franc balance it.

Further reading: