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Today’s Trading Edge: USD/CHF – The Swiss franc is Still Overvalued

Posted by Edward Moya on May 1, 2014 9:48:00 AM

WWM USDCHF MAY 1 2014

The bearish channel displayed on the daily chart on USD/CHF has firmly been in place for the last 12 months.  Price has consistently traded below both the 200-day and 100-day Simple Moving Averages (SMA).  The record low of .8698 made early in March may be the key bottom for this pair.  Since then, price has been steadily consolidating and if we see a breakout above the .8900 zone, which may coincide with the 100-day SMA, we may see a key move above towards the upper boundaries of the longer-term bearish channel.  Key resistance will first come from the 200-day Simple Moving Average at the .9030 level. 

Price action on the 60-minute chart is currently displaying a key selloff that occurred after price could not recapture the .8800 level.  As long as price does not break below .8750 price may stabilize for the rest of the week and target a key move higher towards .8820 initially.   

The trade: Buy USD/CHF at .8785 with a stop loss at .8745 and a take profit at .8895.  The Risk/Reward Ratio is just under 1:3. 

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

 

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