Technical Tools

Support and resistance (S/R). Price levels, trendlines and Fibonacci retracements. Price action, candlestick and chart patterns. Simple moving averages (SMA). Commitments of traders (COT) indicator, which displays speculative positioning in FX futures market, used as a proxy for speculative positioning in spot FX market.

Weekly Chart


Swissie found strong demand near the intersection of the long term trendline that capped rallies in 2003, 2005, 2006, 2008, 2010 and 2015, and the trendline drawn off of 2011, 2014, 2015 and 2016 lows (spikes excluded). It appears headed towards the 2008 - 2016 support/resistance line.

Speculative Positioning

Speculators were net short 25.5K Swiss Franc futures contracts ahead of the ECB meeting in December 2015. After flush-out that followed, the net position held in -10K to 10K range up for the most of the year. In Q4, bulls have been exiting and new bears entering. The net short position currently stands at 22.2K.

Daily Chart


Initial reaction to the U.S. election outcome was a sell-off to 0.9550. The selling was reversed on the same day and the pair has so far rallied almost six cents, to 1.0135. Broken channel-line drawn off of November 2015 and January 2016 highs near the parity level should now act as a support on a pullback.

Fundamentals

Monetary policies from the Fed and the SNB are diverging: the former is in the middle of policy tightening whereas the latter has been easing it. The SNB is determined to keep the franc weak and is regularly engaging in "smoothing" operations in the FX market in addition to usage of negative interest rates.

Prediction

Taking into account all the above-mentioned factors, I expect the pair to be trading near 1.0225 towards the end of the forecast period which will conclude on the 2nd of December, 2017, at 12:00 GMT. Ideally, the pair will follow the expected price path as outlined on the charts.
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