USD/CHF: The Upside Rally May Accelerate

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Market Sentiment: Bullish

Key Takeaways

·        Durable goods orders news is due for release today

·        Bulls are controlling the market

·        Key support areas: 0.9020, 0.9174

The upside rally that began in the start of the current week continues as the US dollar is gaining strength against the Swiss counterpart. As of this writing, the USD/CHF pair is being traded at 0.9464, the level previously touched in February 2014. The key resistance areas on the 4-hour chart are 0.9354 that pertains to 23.6% fib level and 0.9197, the 38.2% fib level.

Fundamental analysis

A strong volatility in the trend is expected later in the US session as release of durable goods orders is due today. The previous month reading is 22.6%. For this month, the consensus of analysts is around -18%. Generally speaking, a higher reading impacts positively on upside rally. So if it really comes better than the estimate of -18% then the ongoing momentum of upside rally may accelerate and dollar may witness further appreciation.

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Furthermore, the US department of labor is also going to release the initial jobless claims and continuing jobless claims reports today. Previously, the initial jobless claims were 280K that are expected to increase to 300K as projected by analysts. The increased figure will impact the economy negatively. Same is the case with the continuing jobless claims which are expected to increase from 2.429M to 2.450M. Therefore, we will see certain degree of volatility following the release of the economic data.

Trading strategy

Keeping in view the overall technical and fundamental outlook, buying the pair on dips still appears to be a good strategy in short term while selling may also be considered on the emergence of a bearish pin bar, shooting star or bearish engulfing candle.

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