USDCHF at major resistance

7 April, 2017

Sell below 0.9991. Stop loss at 1.0040. Take profit at 0.9923.

Reason for the trading strategy (technically):

Price is now testing major resistance at 1.0068 (horizontal pullback resistance, Fibonacci retracement, bearish divergence) and we expect a drop to at least 0.9973 support (Fibonacci retracement, bearish divergence potential).

Stochastic (34,5,3) is seeing strong resistance below the 91% level and bearish divergence vs price signalling a major reversal is impending.

Reason for the trading strategy (fundamentally):

The major news item driving USD today is the Nonfarm Payrolls. The Nonfarm Payrolls measures the change in the number of people employed during the previous month, excluding the farming industry. Job creation is the foremost indicator of consumer spending, which accounts for the majority of economic activity. A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD. Arguments in favour of stronger payrolls include challenger reporting significantly smaller rise in layoffs, ADP reports 263K vs 245K, ISM manufacturing employment strongest since November 2013, rise in University of Michigan Consumer Sentiment Index and Conference Board Consumer Confidence Index hits 17 year high. Overall, we should expect a strong USD and since this is against our bearish USDCHF view, it is best to exercise caution on this trade.


Source  
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