USD CHF Rallies on Potential SNB Action

The USD CHF closed sharply higher on Thursday.  The quick rise to theupside came after early session weakness and formed a closing pricereversal bottom.  This type of reversal pattern is usually indicativeof the start of a major rally.

The USD CHF closed sharply higher on Thursday.  The quick rise to the upside came after early session weakness and formed a closing price reversal bottom.  This type of reversal pattern is usually indicative of the start of a major rally.

Technically, strong buyers came into the market just ahead of a swing bottom at 1.1240.  Fundamentally, there is speculation building that the Swiss National Bank is poised to take aggressive action to devalue the currency as it battles a deflationary threat.  A couple of weeks ago this was only a threat but since then the SNB has been awfully quiet which could indicate they are poised to strike.

Look for a trade through 1.1432 to confirm the reversal bottom and signal the start of a rally to at least 1.1506 to 1.1561. Once the market can regain this zone then it will have room to the upside.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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