Will USD/CHF Exit its Recent Range Soon?

USD/CHF traded lower during the European morning Friday, after it hit resistance near 0.9955. The pair has been trading within a sideways range between 0.9910 and 0.9990 since January 17th and although it now looks to be headed towards the lower bound of that range, we would prefer to remain sidelined for now, especially ahead of the US employment data.

We would like to see a decisive break below 0.9900 before we get confident on the pair’s downside exit out of the range. The catalyst for such a move may be a disappointing jobs report later today, with the dip perhaps opening the way for our next support territory, at around 0.9850. Another break lower, below 0.9850, may carry more bearish implications, allowing sellers to put the 0.9800 zone on their radars. That hurdle stopped the rate from moving lower on January 14th.

Looking at our short-term oscillators, we see that the RSI turned down after hitting resistance slightly above 50, while the MACD lies fractionally below both its zero and trigger lines. Although both indicators suggest negative momentum, the fact that they both lie near their equilibrium barriers supports our choice to stay sidelined and wait for the pair to pick up some decent steam, in either direction.

On the upside, a break above 0.9955 may signal that traders want to keep this pair trendless for a while more. Such a move may be triggered by strong US employment data and could open the way towards the upper bound of the range, near 0.9990. In order to start leaning to the bullish side, we would like to see a clear break above the psychological zone of 1.0000. That would confirm a forthcoming higher high on both the 4-hour and daily charts and may initially pave the way for the 1.0040 barrier, defined by the inside swing lows of November 14th and 15th. If that level proves to be no obstacle for buyers, then we may experience extensions towards 1.0080.