Review and dynamics
The decision of the SNB to keep the key interest rates in Switzerland on the same levels did not catch market participants by surprise. The Frank hardly reacted to the SNB’s decision. The pair USD/CHF had grown by about 20 points after this decision. Over a week the pair USD/CHF has been trading in the narrow range between the levels of 0.9705 (Fibonacci 23.6% to the decline since December 2015, at the level of 1.0300) and 0.9760 (the key level and the line of balance at the moving average lines ЕМА200 and ЕМА144 on the daily chart).
In September the pair USD/CHF in traded in the range with the width of about 200 points between the levels of 0.9820 (Fibonacci 38.2%) and 0.9635 (lows of September).The highest range, which was formed in March, is between the levels of 1.0000 (Fibonacci 61.8% and psychological level) and 0.9520 (lows of April and Fibonacci 0%, bottom of decline in USD/CHF since December 2015).
The pair failed to overcome resistance level of 0.9885 (upper limit of the descending channel on the daily chart) and reach resistance level of 0.9910 (Fibonacci 50.0%), due to the mixed US statistics released at the beginning of September.
The indicators OsMA and Stochastic give mixed signals typical for the flat periods in the market.
Market participants are in anticipation of the interest rate decision by the US Fed. It is likely that the rate will remain at ate current level of 0.5%. According to CME Group, probability of the rate hike at the meeting on September 20-21 is only 15%.
On Wednesday futures for the Fed’s interest rates showed that probability of the key interest rate increase in December was 48% against 55% a day earlier. If the rate will be increased at the meeting, it will cause a sharp rise in the USD and in the pair USD/CHF. In this case the price can break out the level of 0.9910 and go up to level of 1.0000.
Otherwise, the pair can go back below the level of 0.9705 in the lower line of the range (between the levels of 0.9950 and 0.9520).
At the same time the pair is unlikely to exceed support level 0.9520 because of the possibility of intervention in the currency market by the SNB.
Support levels: 0.9705, 0.9635, 0.9600, 0.9580 and 0.9520.
Resistance levels: 0.9760, 0.9820, 0.9885, 0.9910, 0.9950 and 1.0000.
Sell Stop: 0.9690. Stop-Loss: 0.9730. Targets: 0.9635, 0.9580 and 0.9520.
Buy Stop: 0.9780. Stop-Loss: 0.9740. Targets: 0.9820, 0.9885, 0.9910, 0.9950 and 1.0000.
The line of balance 0.9760
The range of 0.9705 – 0.9820