FxWirePro: USD/CHF Attempts To Counter Shooting Star But Major Trend Still Drifts In Range – Trading And Hedging Setup

USDCHF bears have shown their effects in the minor trend upon shooting star formation at 0.9996 levels, consequently, the steep slumps in the price below DMAs has been observed.

Although one could see the mild rallies from last 3-4 days, but 7-DMA caps such interim rallies (refer daily chart). 

The stiff resistance zone is observed at 0.9979 – 1.0027 levels. The frequent formations of shooting stars have occurred at this stiff resistance.

CHF performance within G10 FX is relatively mid-range over this period, but that still leaves it as second worst performing currency in this subset YTD.

While on a broader perspective, the major trend which is tight range bounded (1.0350 – 0.87 levels).

The bears pop-up at the stiff resistance of 0.9994 and the failure swings have been observed in the last 3-4 month’s consolidation phase of the major downtrend (refer monthly chart), while the momentum oscillators, on this timeframe, signal overbought pressures.

Both RSI and Stochastic curves show downward convergence to the prevailing price slumps to indicate the intensified selling momentum but the trend indicators are indeicisive.

Trading tips: At spot reference: 0.9902 levels, it is wise to snap deceptive rallies and deploy short trades for the downside targets of 0.9850 levels but maintain stop loss of 0.9923 levels. Thereby, one can achieve attractive risk/reward ratio (with 21 pips of risk and 52 pips of returns).

Short hedge: Alternatively, we advocate shorts in futures contracts of mid-month tenors with a view to arresting potential dips ahead of monetary policies of US Fed and SNB that are scheduled for this week. since further price dips are foreseen we would like to uphold the same strategy by rolling over these contracts for September month deliveries.