Fundamentally, The Swiss National Bank, SNB, communicate that they dont want the currency being too strong, (which is the lows on the USDCHF chart) and will step in and sell it. Thus this market has been ranging back and forth and its simply identifying the extreme points of the range thats it.
Switzerland has the lowest interest rate in the G10 which could provide supply for this currency as other nations begin to tighten policy and rate hike cycles (especially US with current rate at 2.25% and another hike penciled in for Dec2019 increasing the differential to 3.25% - the largest differential in the G10). This would work against this trade idea and should be the main reason to drive USDCHF higher.
Thats said, with all the factors surrounding the USD, the DXY is really struggling to test $97.00 and make new highs for the year, suggesting sentiment could actually be bearishthe US Dollar , as theres value to be found else where, too early to tell this at present.
Growth was picking up beating expectations the SNB reiterated to hold rates at -0.75% however we are waiting for the first quarter point hike in summer 2019. Furthermore, SNB are fearful of the CHF getting too strong against the USD as the Swiss economy is export dependent.
External risks include global risk sentiment which if worsen would cause CHF to appreciate as a safe haven currency.
Market positioning very NET long USD and if some of these unwind ahead of the US mid terms USDCHF could fall.
If italy and China-US risks fade would also create downwards pressure for USD.
Going in to 1Q2019... If US growth momentum begins to slow from the pace of growth in 2018 and EU growth begins to pick up pace and Euro Area Core picks up coupled with hawkish guidance from the ECB about 1st rate hike would cause positioning to unwind in USD and strengthen $EUR and $CHF. However no indications of the European growth story yet, and would also need European politics to improve.
Entering short in to major resistance, ideally at the top of a strong rally in to the level without any pullbacks on the way up. Entering 1.0046 with stops above May high 1.0120 (75 pips) which is very conservative stop loss. Could tighten up the stop to 50 pips or even tighter to just above the July high... Main profit target is 0.9500 (550 pips, 8 to 1 returns) handle ahead of the Major support 0.9440 as ONLY FOOLS PLAY FOR TOP DOLLAR!!!
Taking profits along the way T1=0.9900 T2=0.9700 T3= 0.9500 tightening stop loss along the way until only T3 left and stoploss in front of entry.
Watch out for the 200DMA this market does react... also watch out for potential rising could provide some support. pay attention to market sentiment on the way down, when news hits that is for CHF does it strengthen? If not then may be time to bail on the trade