Forex Signal: USD/CHF Correction Setup – July 8, 2014

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Forex Signal: USD/CHF Correction Setup - July 8, 2014

Forex Signal: USD/CHF Correction Setup - July 8, 2014

USD/CHF made a reversal forex signal from the previous downtrend after breaking above the trend line resistance connecting price highs on the 1-hour forex chart. However, price has found difficulty breaking past the .8950 minor psychological level and may need to pull back to gather more buying momentum before posting a buy forex signal.

Stochastic is already moving out of the oversold area, indicating that the retracement might be shallow and that a forex signal bounce might take place sooner or later. The 38.2% Fibonacci level might hold as support, although the 61.8% Fib is better lined up with the broken resistance area and the .8900 major psychological support.

A bounce from any of the Fib levels could take the pair up to its previous highs at .8950 or higher. Going long at .8900 with a tight stop and an initial target of .8950 could yield a good return on risk for a short-term trade.

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USD/CHF Forex Signal Outlook

Swiss CPI and retail sales are both on today’s schedule and these are expected to show improvements. With that, the franc stands to gain a bit more ground against the US dollar in the upcoming London trading session if the data comes in strong. This could push for a deeper correction until the .8900 support zone.

Weak figures, on the other hand, can lead to an early rally and an upside break from the current range consolidation. There are no major reports lined up from the US, yet traders might be keen to start pricing in dovish expectations for the upcoming FOMC minutes release later this week.

If the minutes of the Fed meeting are not as downbeat as expected, the dollar might be in for a relief rally as traders could incorporate the potential effect of the stronger than expected NFP release on the Fed’s stance.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.