USDCHF is set to start another impulse forex wave, as the pair is sitting at the bottom of the ascending trend channel on its 4-hour chart. Price could bounce off the floor at the .9600 major psychological handle and test the top of the channel near the .9900 major psychological resistance.
Stochastic is moving up, with a shallow bullish divergence, indicating that buying pressure is present. This could lead to a rally for the pair and an end of the previous corrective forex wave.
USDCHF Forex Wave Pattern
A weak rally might lead to a move only until the mid-channel area of interest around the .9750 minor psychological mark. This area has served as support and resistance in the past and may continue to do so in the next few days.
The main event risk for this forex wave pattern is the FOMC statement in today’s US trading session. Most traders are expecting the Fed to drop the “considerable time” wording and hint that they are moving closer to hiking interest rates sometime next year. If so, the dollar could be in for a strong rally that might last until early 2015.
On the other hand, a downbeat economic assessment might lead to dollar weakness and a possible break below the USDCHF channel support. This would show that the corrective forex wave is still going on and might last until the next support zone around the .9400 major psychological mark.
There are no major reports due from Switzerland today, as the franc might simply take its cue from euro zone data. Unfortunately though, there are no main events lined up from the region today, although yesterday’s figures came in mostly stronger than expected.
The SNB is still biased towards easing or currency intervention as they’ve vowed to defend the franc peg. Fundamentally, the path of least resistance for this forex wave pattern is to the upside.
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