USD/CHF Rally Eyes Major Resistance Ahead Of NFP

USD/CHF Daily Chart

(Click on image to enlarge)

Technical Outlook: Swissie has been trading within the confines an ascending pitchfork formation with the advance now approaching an area of key confluence resistance 9814/33- this region is defined by the March swing low & the 200-day moving averages and converges on the median-line (blue) and basic trendline resistance off the yearly high. The advance is at risk heading into this region with near-term support eyed at the monthly open at 9680. Broader bullish invalidation rests at the confluence of the lower parallel & the 9/11 reversal-day close at 9560.

A breach above key resistance would invalidate the reversal play and likely fuel accelerated gains for the greenback with such a scenario eyeing topside resistance objectives at 9882, 9991 & the double bottom measured move at 1.0108.

USD/CHF 240min Chart

(Click on image to enlarge)

Notes: A closer look at price action further highlights this near-term resistance zone with the 50-line converging on the monthly / weekly open at 9680. A break below this level shifts the focus towards support targets at 9647, 9604 & the 61.8% retracement / lower parallel at 9560.

Bottom line: heading into tomorrow’s U.S. Non-Farm Payrolls report, the risk remains for an exhaustion high into highlighted resistance before pulling back. From a trading standpoint, I’ll favor fading rallies into resistance with a drop into the lower parallel to offer more favorable long entries. Added caution is warranted heading into the release with the event likely to fuel increased volatility in the USD crosses.

• A summary of IG Client Sentiment shows traders are net-long USDCHF- the ratio stands at +1.8 (64.3% of traders are long) – Weak bearishreading
• Retail has remained net-long since Apr 21; price has moved 0.8% lower since then
• Long positions are 3.1% higher than yesterday and 23.8% higher from last week
• Short positions are 25.4% higher than yesterday and 28.2% higher from last week
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDCHF prices may fall. Yet traders are less net-long than yesterday and compared with last week and the recent changes in sentiment warn that the current USDCHF price trend may continue higher despite the fact traders remain net-long.