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Today’s Trading Edge: USD/CHF nears bearish Gartley pattern

Posted by WorldWideMarkets . on Jan 3, 2016 5:39:32 PM


USD/CHF started the trading week both around the parity level and above the 50-day SMA. The greenback however was unable to continue higher after Federal Reserve Vice Chairman said he supports higher rates if financial markets heat up.   Market expectations remain varied as to how many times will the Fed will raise rates this year.

The USD/CHF daily chart shows that since the middle of August, price rallied to the 1.0326 level, which is the 161.8% Fibonacci expansion level of the .9900 to .9257 move. Price has steadily consolidated in December and is now tentatively trading above the 50-day SMA. If the bullish move continues, we could see price target the 1.0125 level. It is around that area that price may form a bearish Gartley pattern. Point D is targeted with the 61.8% Fibonacci retracement level of the X to A leg and the 200.0% Fibonacci expansion level of the B to C move. If valid, we could see a reversal target another return towards the parity level.

If the bullish trend continues, major resistance will come from the 1.03 handle. Further upside may eventually target the 1.08 level. 

If risk aversion returns to the financial markets, we could see downward pressure target the .9820 region.

The trade: Buy USD/CHF at .9975 with a stop loss at .9925 and a take profit at 1.0125. The Risk/Reward Ratio is 1:3

Topics: USDCHF, Swiss franc, USD


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