USD/CHF has rallied on a rebound for the past three weeks that has raised the currency pair from the .9149 low to a confluence of resistance that includes the psychological .9500 handle and both the 100- and 200-day SMA.
The rebound was supported by the Swiss National Bank intervention efforts to weaken the franc. Market investors may now choose to buy other safe-haven currencies because it is unknown whether the SNB will continue intervening.
If bullishness is able to breakout above the 200-day SMA, we could see the advance target the .9700 area. It is around that area that we could see the formation of a bearish Gartley pattern. Point D may be targeted by both the 61.8% Fibonacci retracement of the X to A leg and the 141.4% Fibonacci expansion level of the B to C decline. If price extends above the .9820 level, the pattern may be invalidated.
Any sustained weakness could eventually find support from the key .9149 support level. A greater retreat could target the .90 handle.
The trade: Sell USD/CHF at .9710 with a stop loss at .9810 and a take profit at .9510. The Risk/Reward Ratio is 1:2.
Edward J. Moya
Chief Technical Strategist
WorldWideMarkets Online Trading