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


USD/CHF broke below the trendline drawn off of 2011, 2014, 2015 and 2016 lows (spikes excluded) in May. The pair then broke below 200 week SMA and posted a weekly close below historically strong support at 0.95 twice since then, but the losses were reversed promptly on both occasions.

Speculative Positioning

Speculators have been net short Swiss Franc futures contract for the most of the past nine months. The net short position (4.9K) was halved after the year-end adjustment and then trimmed further in June. The net position briefly turned long twice since then. Bulls are standing at 22.2K and bears at 27.1K.

Daily Chart


The downtrend since last December is in question as the pair convincingly broke and recorded a weekly close above the strong resistance area which includes the 2017 trendline, 200 day SMA and 0.98 level. Parity level (1.00) is the next target.

Fundamentals

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

Prediction

Taking into account all the above-mentioned factors, I expect the pair to be trading near 0.9875 towards the end of the forecast period which will conclude on the 1st of December, 2017, at 12:00 GMT. Ideally, the pair will follow the expected price path as outlined on the charts.
Translate to English Show original