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Short-term Trading Idea FX USD/CHF - Bull Speculation: Retreat from 0.9475-0.9486 Zone

Trading opportunities on currency pair: the USD/CHF pair is trading by the 0.9475-0.9486 limit zone. Since the dollar has an upward trend, it’s worth considering a rebound from this zone. The scenario for growth will start to be realized after a break in 0.9589. Dollar growth higher than 0.9775 will open the door to 0.9985. If the day closes less than 0.9475 then growth scenarios won’t come true.

In my last idea from 16th March, 2015, I expected the dollar to rise to 1.0312 and 1.1331. There were reasons to believe the dollar would strengthen. Firstly, the USD/CHF rate had won back its losses that it incurred on “black Thursday”, 15th January, 2015. Secondly, the dollar was above the 0.9945-0.9971 resistance zone.

By the end of March, the dollar hadn’t managed to strengthen higher than 1.0000. The USD/CHF rate dropped from a March maximum of 1.0125 to 0.9486. Then the rate of the dollar tried again two more times to develop its upward movement, but was unsuccessful. As a result, on the four-hour period a strong limit zone of 0.9475-0.9486 was formed.

On 18th March, the Chair of the Fed, Janet Yellen, hinted that to raise interest rates in June would be a little early since a strong dollar is interfering with US economic growth. Due to worsening economic figures, rumors have started that the Fed could start another round of QE.

So the Fed is hindered by the extremity of the dollar’s strength. Investors and traders are using Swiss currency as a safe haven on worries that Greece will default. The franc against the dollar has strengthened to 0.9483.

Today I’ve chosen a H4 graph for this review. I’ll have a go at explaining what’s so interesting about it. The USD/CHF rate is by the 0.9475-0.9486 limit zone. Since the dollar has an upward trend, first of all we’re looking at it rebounding.

As soon as the dollar rate passes the trend line (the dotted line at 0.9589) it will start to grow (an expanding formation with 0.9775 as its first target). As soon as the buyers overcome the 0.9775 level, the dollar will shift to the next level, 0.9985.

A break in the limit zone of 0.9475-0.9486 will lead to a fall in the pair to the lower limit of the corridor, 0.9220. When the dollar drops below 0.9475 it will be necessary to keep an eye on the dynamics of the euro/dollar and the pound/dollar so to recognize whether it was a false break. The euro and the pound haven’t broken their lines.

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