USD/CHF

Fundamental: The biggest news this month was the Fed announcing a new round of quantitative easing. This has put a downward pressure on the US Dollar, which is expected to depreciate for the next few weeks. The main question for traders is whether the CHF will appreciate or depreciate, which will decide the fate for the pair.

On Tuesday US will release its CPI Inflation numbers, which traders should look out for. Apart from that, they need to focus on technical analysis by watching overbought and oversold levels, and continue to ride the QE3 wave.

As shown in the chart above, the USD/CHF pair was slowly descending in a downward channel from August. This was broken on the 7^th when QE3 became a reality for traders, and the US Dollar was aggressively sold. Since then the pair has following a downward trend and has recently travelled sideways. This is because the USD became oversold and experienced a brief rally, which should not continue for long. The price has retraced back to its EMA, and should fall again soon.

If the pair experiences a strong rally, it will meet an even stronger resistance level at 0.945, which has been historically important. From the 7^th to the 10^th, prices stalled on the same resistance level (support level at that time), before breaking it due to QE3. Therefore, traders should not expect the price to cross this level until a major event occurs. The pair has no support level – other than the price’s own current position – so if the pair falls again it is likely that this will be a strong directional move.

MACD has been in the negative from the 5^th of September, so there is a strong bias of shorting the pair. However, recently it has been bullish and has been rising from the 14^th. Traders should keep in mind it is still below the 0 point, so a rally may not be as strong as imagined.

Stochastics just reached the overbought mark and is poised to descend. This is more in line with QE3 and should be bearish for the next day or more. However, traders must be cautious as it has just reached the overbought mark and hasn’t begun a descend, so they should wait until a clear sign emerges.