Review and dynamics
After the sharp rise last Friday (which was caused by the positive US consumer price index (CPI) in August, which rose by 0.2% against the forecast of 0.1%. On annual terms, the index rose to 1.1%against the forecast of +1.0%), the pair USD/CHF has been declining for the second day in a row.
However, trading volumes in the currency market are low in anticipation of the Fed meeting on 20-21 September. Traders’ activity is also low.
Almost all September the pair USD/CHF has been traded in the narrow range between the levels of 0.9705 (Fibonacci 23.6% to the decline since December 2015 and the level of 1.0300) and 0.9820 (Fibonacci 38.2%). The median line of the range and line of balance is the level of 0.9760 (ЕМА200, ЕМА144 on the daily chart).The maximum 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%, i.e. the bottom of the decline in USD/CHF since December 2015). Important resistance levels are 0.9910 (Fibonacci 50.0%) and 0.9950. Support levels are 0.9635 and 0.9600.
The indicators OsMA and Stochastic give mixed signals. On the 4- hour chart the indicators recommend to open short positions. On the daily chart they give signals for long positions.
Market participants await interest rate decision by the US Fed. It is likely that the rate will be left at the previous level of 0.5%. If the rate is raised, The USD will sharply rise, including the pair USD/CHF. The pair may break down the level of 0.9910 and continue to rise up to the level of 1.0000.
Otherwise, the pair can go down below the level of 0.9705 to the lower are of the range (between the levels of 0.9950 and 0.9520). A lot will depend on the comments by the US Fed representatives, which will be known tomorrow at 21:30 (GMT+3), when the press conference of the Fed will begin.
However, breakout of the support level 0.9520 is unlikely because of the threat of intervention to the currency market by the SNB.
Support levels: 0.9760, 0.9705, 0.9635, 0.9600, 0.9580 and 0.9520.
Resistance levels: 0.9820, 0.9885, 0.9910, 0.9950 and 1.0000.
Sell Stop: 0.9740. Stop-Loss: 0.9790. Targets: 0.9705, 0.9635, 0.9580 and 0.9520.
Buy Stop: 0.9830. Stop-Loss: 0.9770. Targets: 0.9885, 0.9910, 0.9950 and 1.0000
The line of balance is 0.9760
Indicators give signals to sell