USD/CHF has retreated from a near double-top pattern from the .9400 region. Early in NY, price is tentatively finding some support from the .9300 handle. The mid-week rebound with the greenback failed to reach last week’s high of .9501. Despite improving U.S. economic data, the dollar rally has been unable to generate a strong rebound.
If we see some selling pressure drive price to the .9280 level, we could see the formation of a bullish Gartley pattern. Point D would be targeted with both the 161.8% Fibonacci expansion level of the B to C leg and 70.7% Fibonacci retracement of the X to A rally. If valid, we could see a sustained advance reach the upper boundary of the recent two-week range. A daily close above .9500 could open the door for further momentum to aim for the .9750 region.
If this bullish reversal pattern is invalidated, major support may come from .9230, which is the bottom of the recent range.
The trade: Buy USD/CHF at .9280 with a stop loss at .9220 and a take profit at .9440. The Risk/Reward Ratio is 1:2.
Edward J. Moya
Chief Technical Strategist