Price action on the USD/CHF daily chart displays a potential bearish Gartley pattern after price pierced the .9000 barrier on Friday. Point D was confirmed by both the X to A 78.6% Fibonacci retracement from the June high to July low leg and the 161.8% Fibonacci expansion level of the B to C move. Since falling towards .8700 in March, price has slowly stabilized and is trending above all three key simple moving averages. Since breaking above the 200-day SMA, price has had some difficulty breaking above the .9050 level.
With safe-haven inflows likely to remain the current theme in the markets, we may see the Swiss franc gain a slight bid. If we see soft growth in the second quarter, U.S. yields will remained trapped and rate hike forecasts will be pushed back and dollar bulls may be disappointed. Key upside resistance will come from the .9150 zone, which is the 2014 high.
The trade: Sell USD/CHF at .8985 with a stop loss at .9035 and a take profit at .8900. The Risk/Reward Ratio is almost 1:2.
Edward J. Moya
WorldWideMarkets Online Trading