by Darren Chu, CFA of Tradable Patterns / Thursday, April 2, 2020

The USDCHF is edging up for the 4th straight day going into the European morning, and appears to be setting up to retest downchannel resistance (on the weekly chart) for sometime in the next few weeks. Significantly, the USDCHF’s strength in the past month is due not in small part to the extraordinary squeeze on short USD positions outweighing the safe haven status that the Swiss Franc often sees during risk off sentiment. The USD short squeeze is fueled not in small part by so much of international trade being denominated in USD and non-US investors being heavily invested into USD denominated US financial market assets, resulting in large net short USD positions held by some companies/investors that have borrowed in USD. Risk sentiment has improved in the past week and a half with substantial announcements of coordinated government action to contain the economic fallout and with early signs of COVID19 daily infection count growth falling in hard hit countries like Italy. Any successful break above triangle resistance (on the 4hr chart) will likely wait until following Friday’s US Non-Farm Payrolls (NFP) and coincide with a retest of the zone of prior support seen January, June and August 2019, and the March high in the day or so after. The weekly, daily and 4hr RSI, Stochastics and MACD are rallying, consolidating recent gains or bottomish. I am looking to go long in the green zone (of the daily chart) and am targeting the red zone for mid next week. The amber/yellow zone is where I might place a stop if I was a swing trader (although in my personal account with which I seldom hold overnight I sometimes set my stops tighter). Click here to read today’s technical analysis of EURUSD, WTI Crude.

USDCHF Weekly/Daily/4hr

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About the author

Before the launch of Tradable Patterns , Darren Chu, CFA, served as IntercontinentalExchange | NYSE Liffe’s country manager for Australia, India, and the UAE between July 2010 and January 2014, expanding his role to look after Liffe business development in APAC ex-Japan/Korea until his departure mid April 2014. His primary remit was developing relationships with Liffe clients, prospects and partners in the buyside (traditional and alternative asset managers), proprietary trading (high frequency algo as well as manual, point and click traders), bank, broker (institutional and retail), commodity trader and ISV community. Key futures and options promoted included European/London rate benchmarks such as the Euribor, Short Sterling, Gilts, London/European index futures including the FTSE and CAC, London soft commodities (Robusta Coffee, Cocoa, White Sugar), Paris (MATIF) markets (Milling Wheat, Rapeseed), and NYSE Liffe US markets with the MSCI EM, MSCI EAFE, gold/silver, Eurodollar, US Treasury and GCF Repo futures being the focus.

Previously, Darren was with the TMX Group | Montreal Exchange for 4 years, marketing Canadian futures and options across North America, London, Singapore and Hong Kong. Darren also launched and managed CMC Markets Canada’s Chinese marketing and sales team, along with educational offering. On the academic trail, Darren has been a frequent guest speaker at Canadian universities as well as an author of content for 3 derivatives courses offered by Canadian Securities Institute and mandatory for licensing of Canadian derivatives industry professionals.

Darren can be reached at: +65 8118 8840 or via email at darrenchu@tradablepatterns.com.