Forex Technical Analysis USD/CHF

Good afternoon, dear traders. Today at 10:30 CET we expect the release of Manufacturing Production m/m, the UK. The index is published monthly, and this is the key indicator for the country’s economy. Manufacturing, which makes up to 80% of the country’s industrial production, is based on high-tech solutions and creates high value added: that makes it appealing for investment. Besides, this sector is the most susceptible to consumer sentiment, defined by unemployment and income rate. Later on, at 12:45 CET the head of the Bank of England Mark Carney is expected to give a speech in Liverpool, and outline the future monetary policy. Both fundamental events will have a significant impact on the entire group of European currencies, including Swiss franc. Tight trade relations of Great Britain and other EU countries result in the movement correlation of such currency pairs as GBP/USD and USD/CHF. The correlation coefficient, based on the last 13 H4 candlesticks, fell below the value of -80%. We expect that the index release and Mark Carney’s speech may influence greatly the USD/CHF rate. 

Here we consider the behavior of USD/CHF on the H4 chart. The price crossed the H4 resistance line, which can be considered the first sign of the uptrend acceleration. ParabolicSAR and DonchianChannel confirm the direction. Moreover, the last Parabolic value approached the resistance line. There is no contradiction on the part of RSI-Bars oscillator, its value topped the mark of 83%. This happened at the same moment with the nearest fractal resistance breach. We assume that a buy order can be opened if the upward movement continues and there is an intersection of a local candlestick high at 0.93770 after the release of fundamental data. Risks can be limited by the last fractal support at 0.92853, which cuts across the resistance line. This level is also confirmed by the Parabolic historical values.

After position opening, Trailing Stop is to be moved after the ParabolicSAR values, near the next fractal trough. Updating is enough to be done every day after the formation of 5 new H4 candlesticks, needed for the Bill Williams fractal formation. Thus, we are changing the probable profit/loss ratio to the breakeven point.

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