USDCHF technical analysis ahead of FOMC


The Fed is expected to release a statement on the minutes of their recent meeting tomorrow, March 15, 2017. It is widely believed that a rate hike will be announced. Whilst the data could strengthen the USD significantly, interestingly, the charts currently paint a technically weak USD picture. Let’s take a look at the USDCHF technical analysis ahead of FOMC statement tomorrow.

14 March, AtoZForex – The USD has begun the eventful week on the back foot. The greenback fell against the GBP, AUD, CAD and the CHF on Monday. As the major news nears, there may be a thin trading activity in the sessions ahead of the rate statement.

The CHF by contrast begun the week on the strong foot. It has strengthened against the majors this week. If this move continues, the USDCHF could slide to multi-week lows in the days ahead.

 

USDCHF technical analysis ahead of FOMC USDCHF Daily chart (click to zoom)

 

On the Daily chart, the USDCHF has been in a consolidation mode since the turn of the year. The range formed a flag pattern which appears to have been broken by yesterdays candle which closed at 1.0064. If the breakout holds, we should expect a gradual but sure decline in price within the short to mid term. Unless this pattern is violated, my bias remains short on USDCHF.

USDCHF technical analysis ahead of FOMC: Bearish divergence indicates a possible sell-off

USDCHF technical analysis ahead of FOMC USDCHF Daily chart (click to zoom)

 

The Daily chart also shows a bearish divergence. While this is not a fool proof pattern, it is a strong indication of a possible sell-off. Traditionally, a divergence indicates a loss or reduction in momentum. As the breakout of the  bearish flag pattern showed, the short to mid term bias remains short on USDCHF.

USDCHF technical analysis ahead of FOMC USDCHF Weekly chart (click to zoom)

 

The Weekly chart shows an emerging bullish harmonic pattern. The pattern begun at 1.0344 (December 2016 high) and is expected to climax at 0.97 region. The point ‘C’ peaked at 1.0170, thus a decline to point ‘D’ is needed to complete the pattern.

Despite the overwhelming bearish outlook, it is important to note that news over rides technical analysis. Hence, a hawkish FOMC would strengthen the USDCHF pair.

What do you think of our USDCHF analysis and trade setup? Comment your observations below.

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