USD/CHF Forecast for the Week of Dec. 12th, 2011, Technical Analysis

The USD/CHF pair has been a very quiet pair over the last several weeks as the markets are respecting the recent push back by the Swiss National Bank and the intervention threats. The USD/CHF has a duel set up really, as the US dollar is the “safe haven” currency everyone runs to in times of trouble. The Swiss Franc used to enjoy this status, but with the Swiss National Bank working against it, traders aren’t comfortable in buying it presently.

As long as there is serious concern over the world’s economies and the EU in general, there will be a bid for the US dollar. So why not buy it against a currency that is being worked against by its own central bank? That is the thinking in this pair it seems. However, the 0.93 level has been very stubborn to give way, and this has kept a lid on this market overall. It should be noted however that the pair does fall – it bounces again.

The downside is protected by the 0.9000 level and even lower at the 0.8500 level. The recent pullback was healthy and looks very constructive. If there is a continuation of global fears, the Dollar should continue to benefit, and this pair should rise eventually. The closing of the pair above the 0.93 level would be very bullish in this pair, and have us long. Shorting this pair isn’t an option for us in this pair as the Swiss National Bank will certainly get involved if the Franc gets some kind of bid from the markets in general. The EUR/CHF pair is the trigger if it falls too much, but the Franc-related pairs should all rise in unison if they get involved. Because of this, there is more upside risk than down.

The daily chart will be out trigger to get involved if we get a close above the 0.93 level. The pair will find the next couple hundred pips tough, but the breaking of it would be a massively good sign and we will see it rise over time.