USD/CHF: Franc demand _01/07/2016

Trading recommendations

Buy Stop 0.9780. Stop-Loss 0.9740. Targets 0.9820, 0.9910, 1.0000

Sell ​​Stop 0.9720. Stop-Loss 0.9770. Targets 0.9705, 0.9650, 0.9580, 0.9520, 0.9445, 0.9400


Technical analysis

Since however, the beginning of June, the pair USD / CHF is actively reduced, to date it has stabilized near the level of 0.9750 (EMA50 on the weekly chart, EMA200, EMA144 on the daily chart).

After publication of the outcome of the referendum held in the UK and the SNB intervention pair USD / CHF has grown, so 230 points or 2.4% to the June lows.

Since March, pair USD / CHF is generally in the range between the levels of 1.0000 (psychological level and the level of 61.8% Fibonacci correction of the last global wave decline from December 2015 and from the level of 1.0300) and 0.9520 (low of April and the level of the Fibonacci 0%).

It is likely that the pair USD / CHF in the short term will remain within the ranges, wide between the levels of 0.9520 and 1.0000, narrow between the levels of 0.9705 (Fibonacci level of 23.6%) and 0.9820 (38.2% Fibonacci level) with a median line passing near the level of 0.9750.

 Strong supports from lower pair are the levels of 0.9520 (Fibonacci level of 0% and the lower line of the rising channel on the daily chart) and 0.9580 (EMA200, EMA144 on the weekly chart), and resistance - level 1.0000 (psychological level and Fibonacci level of 61.8%).

In the short term 1-2 days possible reduction pair to the support level 0.9705 (indicators OsMA and Stochastic on the 4-hour and daily chart indicate the sale).

In this regard, we should also pay attention to the decline of the dollar against the yen and gold.

The support level 0.9520 breakthrough could pave the way for a deeper reduction in the levels of 0.9400, 0.9160 (May and June 2015 lows).

Otherwise, the immediate goals of growth will be the resistance levels are 0.9820 (38.2% Fibonacci level), 0.9910, 1.0000.

Support levels: 0.9705, 0.9580, 0.9520, 0.9500, 0.9445, 0.9400

Resistance levels: 0.9750, 0.9820, 0.9910, 1.0000


Overview and Dynamics

After publication of the results of the referendum in the UK on Friday SNB conducted currency intervention, not allowing him to significantly strengthen against the euro and the dollar.

According to the SNB Franc remains significantly overvalued, and many economists believe that Swiss GDP growth over the next three to five years will be no more than 1% -1.5%.

In order to stabilize the franc and hold it further from excessive strengthening may, in addition to currency intervention SNB will have to lower the rate on deposits from the current level (-0.75%).

Throughout the past week, conflicting reports coming out through Switzerland. If released into the environment UBS consumption indicator in Switzerland, which since June last year, has been steadily declining, in May was better than the previous index (1.35 against 1.24 in April), another indicator of inflation and consumer confidence - real retail sales - I came out today with a decrease (-1.6% in June yoy vs. -1.9% in May).

Another important condition of the Swiss economy indicator, PMI SVME, assessing business conditions in the manufacturing sector in Switzerland, came out today with a decrease (51.6 in June against the forecast of 55.4 and 55.8 in May).

On the whole, the Swiss economy is in good shape, unemployment is one of the lowest in Europe and in the world (close to 3%), and by the right franc is considered a stable currency, although it has lost in the main status of safe haven currency due to the National Bank of Switzerland's actions in the foreign exchange market with unexpected franc sales. Moreover, the Swiss National Bank almost never notifies intervention in trading on the foreign exchange market, either before or after such an interference, which hinders market participants from active buying franc and excessive strengthening.

IMF forecasts deterioration in the outlook for global economic growth and the probability of a recession in the world economy in the next year, according to some economists, increased from 30% to 40%. Despite the fact that the IMF calls on governments and the world's major central banks to abandon manipulation of exchange rates and unjustified cuts in interest rates, the struggle for monetary easing in major economies continues. With the Fed increasingly hear the signals of commitment to a loose monetary policy. Near the SNB meeting on this issue will take place on 15 September.