Let's stay away from the Brexit shenanigans and take a look at a more stable country's currency, shall we? USDCHF investing caught my eyes as the pair broke below the daily Ichimoku cloud. But we have some other cool technical developments as well. So naturally, it is time for an IDDA approach to develop a USDCHF investing strategy for my lovely Invest Divas.
1- Fundamental Points
Switzerland: The Swiss are not famous for making dramatic headlines. Besides that time they removed their currency cap that is.
The Swiss government reduced its outlook for the country's economic growth during 2017 in its latest forecast in March. However, their retail sales climbed for the first time in three months in February as reported beginning of April.
Their consumer price index and unemployment has remained unchanged, pretty much in the positive territory.
However the big headline for the Swiss has been currency manipulation. Switzerland has been named as one of six countries on the "monitoring list" in the U.S. Treasury's semi-annual currency report on potential foreign-exchange manipulators.
However the country quickly tried to put this into rest. Jorg Gasser, the country's state secretary for international financial matters said on Tuesday that Switzerland is not manipulating its currency.
So for now, any major moves in the pair for USDCHF investing could be lead by the US dollar. Which brings up to the US fundamentals.
U.S. and A: Remains kinda mixed. Manufacturing conditions came out better than expected, in April. And so did their trade balance. However non-manufacturing PMI disappointed. And so did the Non-farm payrolls (NFP). In fact, the NFP surprised the economists so much that the USD dropped like a hot rock. Specifically, the U.S. economy only generated 98K jobs. This is obviously a very significant miss from the expected net increase of 175K.
Meanwhile US retail sales and consumer price index came in negative last Friday, pushing USD crosses further down on the forex dance floor. This was especially important because the Fed members have been looking at figures like this to justify their plans to raise their interest rates again this year.
This brings us to the second point of IDDA: Technical analysis.
2- Technical Points: USDCHF Investing
The USD/CHF pair has been trading within a downward channel. It has not been able to break above the daily Ichimoku cloud in its most recent attempts in March and April. The Tenkan line has crossed below the Kijun line. And there was a massive bearish engulfing candlestick formed on Monday. You can learn all about these geeky technical stuff here by the way.
USDCHF investing strategy - Daily chart
Keep an eye on the lower highs. What do you see?
3- Market Sentiment
Retail trader data shows 54.3% of traders are net-long the USD/CHF. The number of traders net-short is 17.1% lower than yesterday and 41.7% lower from last week.
We typically take a contrarian view to crowd sentiment. So, the fact traders are net-long suggests USD/CHF could continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USD/CHF-bearish contrarian trading bias.
USDCHF Investing Strategy
As 4th point of the IDDA, you must calculate your risk tolerance before deciding on which trading strategy is suitable for your portfolio. Join us for a free workshop to learn more.
Disclaimer: Forex is one of the HIGHEST risk investing instruments there is. For further help, please visit our investing group.
With regards to USDCHF investing strategy, as an Invest Diva you should be able to put the 3 and 4 together and develop a strategy suitable for your portfolio and risk tolerance at this time. For further help, and if you want to chat with me regarding your trades, join our investing group here. It's awesome!!
Here are Invest Diva's calculations for important approximate levels for USDCHF to keep an eye on:
| Support Levels | Turning Point | Resistance Levels |
|---|---|---|
| 0.9696 | 0.9910 | 1.011 |
| 0.9827 | 1.00 | 1.025 |
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