USD/CHF Forex Signal 16/09: Drifts Lower (Chart)

(MENAFN- Daily Forex) Potential signal:

• If the USD/CHF pair breaks down below the 0.79 level, I am a seller.
• I would have a stop loss at 0.7970 above, with a potential target of 0.75 below.

The US dollar initially tried to rally against the Swiss franc on Monday but pulled back a bit to show signs of exhaustion. All things being equal, this is a market that has been in a downtrend for some time, but we are also watching something close to a“double bottom” coming into the picture. If this ends up being a hard floor in this area, basically the 0.79 level, then we have a situation where people will be looking to“buy cheap dollars.”

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Keep in mind that the US dollar is in a downward trend, but also, we have the Federal Reserve interest rate decision on Wednesday that could have a major influence on what happens next. I think this pair might be an interesting place to trade, mainly due to the fact that we have such an obvious support level to pay post attention to. If the US dollar starts to melt down with a“risk on” attitude, then the Swiss franc could be a potential victim.

EURUSD Chart by TradingView

This is mainly due to the fact that although the US dollar isn't necessarily a risky currency, the Swiss franc itself is considered to be attached to safety, and a falling US dollar could in theory at least, be a sign that people are willing to take on more risk. Furthermore, if there is a general“risk off move”, then the Swiss franc itself could be used as a“safety currency”, causing it to strengthen as traders run toward safety.

The next couple of days will end up being very noisy, but I think by the middle of the Thursday session, we will have an idea as to where a lot of currency pairs will go, perhaps even this one. It is very tight at the moment, and we have a couple of levels worth watching in the form of 0.79, 0.80, and 0.81 above. This is basically the field that we are playing at the moment, but a definitive breakdown could send a fresh new leg lower. This is what I'm watching to see happen.

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