2016-09-01 12:52:41

Overview and dynamics
After a sluggish dynamics of USD/CHF pair at the beginning of today's trading day the pair started the European session with a strong growth, especially after the release of the macro data for Switzerland (SVME PMI, retail sales for August).

In the last days of August, USD/CHF pair broke through key resistance levels 0.9705 (Fibonacci level 23.6%), 0.9760 (EMA200, EMA144 on the daily chart), 0.9820 (Fibonacci level 38.2% of correction to the last wave of the global decline since December 2015 and the level 1.0300), and is aiming for the resistance level 0.9910 (Fibonacci level 50.0%).

Our opinion
Strong upward momentum that appeared in the middle of last month is pushing the pair to the upper part of the range (between the levels 0.9520, 0.9950). The breakdown of the level 1.0000 (Fibonacci level 61.8%, and psychological level) may send the pair towards the December highs near the level 1.0300.

The reverse scenario is a return below 0.9705 to the bottom of the range (between the levels 0.9950, 0.9520), in which USD/CHF pair was trading at the beginning of March.

However, this scenario needs weak macroeconomic figures from the US, which will weaken expectations of an early interest rate increase.

"The first sign" can be the Friday's release of US labor market data. If they are weak (growth is expected at 180,000 new jobs in non-farm sector of the US economy), the US dollar will fall sharply on the foreign exchange market, including USD/CHF pair. At the time of NFPR publication, volatility in USD/CHF pair will rise sharply.

OsMA and Stochastic on the daily chart are at the side of the buyers. Stochastics kept in the overbought zone for several days, indicating a strong upward momentum within the day's range.

On the higher intervals (weekly and monthly), indicators are also reversing to long positions, which seem preferable. If data on the US labor market in August is strong, it will increase the likelihood of an early increase in US interest rates, and this is a positive factor for the dollar, and vice versa.

Support levels: 0.9820, 0.9760, 0.9705, 0.9635, 0.9600, 0.9580, 0.9520
Resistance levels: 0.9910, 0.9950, 1.0000

Trading recommendations

Sell Stop 0.9830. Stop-Loss 0.9870. Targets 0.9820, 0.9760, 0.9705, 0.9635, 0.9580, 0.9520
Buy according to the market. Stop-Loss 0.9830. Targets 0.9910, 0.9950, 1.0000

Breakdown of important resistance level
Breakdown of important resistance level

Indicators reverse to buying
Indicators reverse to buying