Trade highlight: Barclays long USDCHF

10 August,, Vilnius – Barclays Capital in its weekly forex selection note to clients suggests to buy USDCHF for currency investors. The trade is driven both fundamentally and technically.

From fundamental point of view, Barclays’ believes that poor Swiss data will remain to support CHF devaluation from still overpriced levels. “Even if concerns about Greece or China escalate, we think the CHF is likely to underperform higher-quality safe havens such as the USD," as Barclays argues.

Moving on to a technical analysis, Barclays’ strategists are also bearishly biased towards the Swiss franc and expect a further underperformance versus the USD and EUR major currencies.

The upward slopping for the past eight weeks USDCHF trend points higher toward an initial targets in the 0.9865, 0.9905 zone. As Barclays long USDCHF, the bank projects: “A move above the latter would encourage our bullish view toward the 1.0130 March recovery high."

USDCHFDaily Barclays USDCHF Daily Timeframe, Barclays' levels and projections
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Edmund’s view

Franc has breached through a major monthly resistance at 0.982 and is now nearing 23.6% Fibonacci retracement level at 0.991.
Considering orders, a long opportunity could be taken above a local high at around 0.990 and aimed towards the first take profit at a daily combination of custom 10% Fibonacci retracement level and downward slopping monthly trend line at approximately 1.00 and the second TP at a weekly combination of a 0% Fibonacci retracement level and Fibonacci Fan 61.8% at 1.013. A stop loss at 0.984 could be used.

USDCHFDaily USDCHF Daily Timeframe, Support and Resistance levels

Alternatively, the pair could be shorted from approximately 38.2% Fibonacci retracement level at 0.977 to a take profit at 0.970 and a stop loss at 0.980.

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