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Technical Analysis USDCHF : 2015-06-18

SNB leaves interest rates unchanged

Let us consider the USDCHF pair on the daily timeframe. The Swiss economy contracted 0.2% in the first quarter of 2015 as competitiveness of Swiss producers was hurt by abrupt appreciation of Swiss franc after the central bank abandoned the euro peg on January 15, 2015. The European Central Bank started its quantitative easing program in March, purchasing monthly 60 billion euros worth of sovereign bonds in order to stimulate the economy and ward off deflation. The Swiss central bank expects the rise in demand from recovering euro-zone economy will drive the growth in Swiss exports and outweigh the negative impact of stronger franc. The Swiss economy is struggling to recover as retail sales rose 1.6% in April over the same month last year after contracting 2.8% in March. The KOF Economic Barometer, a leading economic indicator, reached a four-month high in May while consumer prices fell 1.2% in annual terms. On Thursday Swiss central bank kept its rate on sight deposits at minus 0.75 %, forecasts economic growth of just under 1% this year, 1 % fall in consumer prices this year, and expects the franc will weaken over time. On this backdrop the US dollar dynamics has been driving the USDCHF pair, and the Federal Reserve statement on June 17 indicated the policymakers expect a more gradual increase in interest rates after the tightening starts later in the year.


The USDCHF pair has been falling on the daily chart since the end of May after completing a double bottoms pattern. The Parabolic indicator gives a sell signal. The RSI-Bars oscillator indicates downtrend. The Donchian channel has also sloped downward. The pair is below the 200-day moving average and has crossed below the last fractal low at 0.92312. We can go short straight away. The stop loss can be placed at fractal high at 0.94451. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level without reaching the order, we recommend cancelling the position: the market sustains internal changes which were not taken into account.


Position Sell
Sell limit below 0.92312
Stop loss above 0.94451

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