USDCHF has been moving sideways recently, creating a forex setup range between support at the .9575 area and resistance at .9725. The simple moving averages are criss-crossing, confirming the range-bound market behavior.
Price just came off a test of resistance and may be headed for the bottom for now. However, stochastic is indicating oversold conditions already, which means that buyers could jump back in and push for another test of .9725.
A continued forex setup drop could lead to a test of support once more or possibly the mid-range area of interest at the .9650 minor psychological level. MACD is heading down, indicating that there’s a bit of selling pressure left.
Forex Setup Forecast
Event risks for this USDCHF forex setup today include the release of US CB consumer confidence data, which might show an improvement from 94.5 to 95.9. There are no major reports lined up from Switzerland today, leaving risk sentiment as a main driver of price action.
Switzerland reported an increase in its employment level from 4.20 million to 4.23 million, which could keep the franc supported today as there are no major reports lined up from the country. As for the dollar, another event risk is the release of the preliminary GDP reading, which could be downgraded from 3.5% to 3.3% for Q3 2014.
Do stay tuned for any updates regarding the Swiss gold initiative as well, as this proposal could have significant repercussions for SNB policy action. The central bank is being required to hold 20% of its assets in gold, which could limit its capacity to intervene in the forex market to keep the franc weak.
Signs that the gold initiative won’t push through and that the SNB is ready to defend the franc peg could lead to a sharp selloff for the Swiss currency and a forex setup breakout for USDCHF past .9725.
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