Flight into the safety of the CHF

The CHF has been one of the beneficiaries of the the US saber rattling in response to No. Korea's threats of smaller nuclear warheads being lobbed over the Pacific. Stocks are down. Gold is up. That is certainly a help.

For the USDCHF, the technical picture shows the pair stepping through technical levels methodically. The 100 hour MA (it held yesterday - at 0.9710) was first broken, followed by a trend line and the 200 hour MA (green line at 0.9694). The price action retested that 200 hour MA on a correction. That helped to reinforce the bearish move lower. The 38.2% of the move up from the July 21 low was also broken at 0.9644 (and retested - again a bearish confirmation). That level (at 0.96448) is now a close risk level for shorts.

The pair is currently trading between the 100 and 200 MAs on the 4-hour chart at 0.96137 and 0.9626 (currently trading at 0.96194). The 50% of the move higher from July 21 comes in at 0.96053.

The flight into the safety will continue as long as the stocks remain under pressure, or the threats intensify, or there is any other action (it is really hard to predict). The good news is that the pair has been reacting to the technical levels, with breaks and retracements holding.

That is a comfort as traders can do some leaning against resistance levels above on corrections. The 0.96448 is the closest resistance level for "leaners" now. If that level is tested and the price stays below, the market may make another run to the downside.

If buying a dip against the 100 bar MA at 0.96137 and 50% at 0.9605, I would be sure to limit the risk, as the trend is to the downside.

The US stock opening at 9:30 AM ET/1330 GMT could increase the pairs volatility as the stock market reaction will be a focus for this pair. Of course US stocks have been on a tear of late with the S&P and the Dow racing to record highs. Yesterday the string of record closes was broken however, as the "fury and fire" headlines from Trump gave traders a reason to sell. With stocks near the highs and a push from nuclear tensions, is the long awaited stock correction around the corner? Traders will be paying close attention.