It is looking better off the rebound
SNBs Jordan did comment on Monday that the CHF remained significantly overvalued.
Typically, the SNB focuses on the EURCHF, which happens to be well off the lows on the back of the stronger EURUSD.
However, against the USD, the CHF was getting stronger mostly on the back of the USD weakness. In fact, on Friday of last week, the USDCHF dipped below the 2016 low of 0.94443. The low reached 0.9438 before rebounding modestly on that day.
In hindsight, the comment from SNB's Jordan may have been laying the pipe for some intervention against the greenback.
Yesterday. the USDCHF moved sharply higher and today that rally has continued. In the process, the price has moved back above the swing lows from 2016 (see daily chart above) and also ran further away from the 2016 low. A double bottom is a nice bottom.
What next?
The June 2017 low at 0.9552, the November 2016 low at 0.9548 and the 61.8% of the move up from the May 2015 low at 0.95567 all come in in a confined area (between 0.9548 and 0.95567). By the way, you can also add the 200 week MA at 0.9554 (see chart below) to that group. We currently trade above those levels at 0.9580. Buyers are making a bullish play.
In addition to giving more of a bullish bias, those levels are important as they represent the risk defining level now for longs in the USDCHF. Stay above is more bullish. Move below, not so bullish (although the SNB is likely showing their hand and they don't seem to like the price below those level).
The low in the USDCHF seems to be in place. At least it seems the SNB wants it to bem and they can help the run higher too with buying.
Technically, the picture is more bullish as well for the reasons cited. That should attract buyers who will lean against support.
So stay above the aforementioned support levels around the 0.9548-57 area, and there is room to roam on the upside. Move below and the waters are more muddy. That's trading.
