USD CHF Posts Daily Closing Price Bottom; Likely Position Squaring ahead of NFP Report

Profit-taking and position squaring ahead of Friday’s U.S.Non-Farm Payrolls Report helped form a daily closing price reversal bottom inthe USD CHF on Thursday.

Profit-taking and position squaring ahead of Friday’s U.S.Non-Farm Payrolls Report helped form a daily closing price reversal bottom inthe USD CHF on Thursday.

This could be something minor or it could be the start of anoverdue correction. It all depends on how traders read Friday’s U.S. employmentreport.

Traders have been driving down the Dollar/Swiss onspeculation the U.S.Federal Reserve will implement additional quantitative easing measures as earlyas next month. Traders have been positioning themselves for the move by theFed, but are uncertain as to how big the asset-buyback will be.

Bearish Dollar/Swiss traders took precautionary measures onThursday just in case tomorrow’s employment report misses pre-report guesses.There is no question that the Fed will add stimulus money, but if the jobsreport comes out better than expected, no one wants to get caught short in anoversized position.

Economists are looking for the September Non-Farm Payrollsreport to show that the labor market is languishing. Wednesday’sweaker-than-expected ADP employment report indicated that the labor marketcould be contracting. Employers may not be firing a lot, they certainly aren’thiring.

Total non-farm payrolls are expected to fall by 8,000 –10,000 in September. The government continues to release more temporary Censusworker jobs than are being created by the private sector.

The most important number to watch is private-sector hiring.Economists are forecasting an increase of about 85,000 jobs.

Technically, the USD CHF is in a downtrend, but Thursday’sreversal bottom could either trigger a 2 to 3 day rally to 50% of the lastswing down or fuel the start or an even bigger retracement.

The current range is .9843 to .9554. This makes theretracement zone at .9699 to .9733 the first potential upside target. Moresellers could show up in this zone, leading to the start of a break to newlows.

If this area is exceeded on the upside, then traders maytake a run at the last swing top at .9843. A trade through this level will turnthe main trend to up on the daily chart. Don’t look for a spectacular surge tothe upside since gains are likely to be limited by a major downtrending Gannangle at .9870.

The size and direction of the next major move in the USD CHFwill be determined by the September Non-Farm Payrolls Report. Hitting the guessor missing a better than expected report is likely to trigger moreshort-covering. If the report is worse than expected, then look traders to stepup the selling pressure on the U.S. Dollar.

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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