The daily closed crossed down below the 190 simple moving average (SMA), triggering a sell signal alert for USD/CHF at 0.9321.
Six days ago the system issued a buy signal alert for USD/CHF at 0.9363, based on momentum and the daily close crossing above the 190-SMA. Today we are closing that long trade at -42 pips and reversing to short. The prior long trade had aimed for 200 pips (0.9550), but the market reached only 100 pips above our entry to 0.9450 before falling backwards.
The 0.9400 area has acted as a strong dividing line between the lower channel (0.9200-0.9400) and upper channel (0.9400-0.9550). Since 0.9400 was breached today on the downside, with the close crossing under the critical 190-SMA, the pair is likely to remain in the lower channel and attempt a retest of 0.9200 support.
A week ago it looked like a risk-off dollar rally in the face an imminent strike on Syria, and the dollar was further supported by expectations that the Fed will start to unwind its stimulus program. Monday, the polls clearly show that an overwhelming majority of Americans oppose a strike on Syria, and only a meagre 13% of those polled say that Obama should strike Syria anyway if Congress does not approve, which is looking more and more likely.
Moreover, the Russians are floating a proposal of placing Syrian chemical weapons under international monitors to head off confrontation, and so far the Syrian foreign minister has welcomed this proposal and is trying to secure a fast and positive answer from his government. Thus, it is looking like an attack on Syria might not happen any time soon, a situation which relaxes investors, allowing them to diversify outside the risk-off US Dollar once again.
