16.01.201509:50 Forex Analysis & Reviews: Technical analysis of USD/CHF for January 16, 2015

Fundamental overview:
USD/CHF is expected to trade in a volatile fashion amid thin liquidity after plunging as low as 0.7360 on Thursday - its record low in three and a half years - after Swiss National Bank expectedly cancelled the minimum exchange rate of CHF1.20 per euro, lowered the interest rate on sight deposit account balances by 0.5 percentage points to 0.75%, and moved the target range for the three-month Libor further into the negative territory, to between -1.25% and 0.25% from the current range of between 0.75% and 0.25%. USD/CHF is undermined by the franc demand for cross trades versus major currencies. But USD/CHF downside is supported by the USD bargain hunting, possible SNB intervention as the Swiss central bank in its statement said it will continue to take account of the exchange rate in formulating is monetary policy in future and, if necessary, it remains active in the foreign exchange market to influence monetary conditions.

Technical comment:
Daily chart is negative-biased as MACD and slow stochastic indicators are bearish, five and 15-day moving averages are declining.

Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below the pivot point. Short positions are recommended with the first target at 0.8405. A break of this target will move the pair further downward to 0.8005. The pivot point stands at 0.9150. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, a long position is recommended with the first target at 0.9550 and the second target at 0.9780.

Resistance levels:
0.9550
0.9780
0.9810

Support levels:
0.8405
0.8005
0.7975