Though USDCHF is in a month-long, rising trend channel, it is also at the top of that channel and starring down considerable resistance. These two facts alone would make a range trade a good probability setup; however there is also fundamental support for a pullback.
Event Risk US and Switzerland[/B]
Trading Tip - Though USDCHF is in a month-long, rising trend channel, it is also at the top of that channel and starring down considerable resistance. These two facts alone would make a range trade a good probability setup; however there is also fundamental support for a pullback. More literal, it is the lack of any top market-moving indicators on the docket that promises to keep all major technicals in place. The optimal scenario under our suggested strategy would have the short side triggered early Monday and book profit before the US calendar receives its first big release on Thursday. Even if the pair pushes higher in the interim, a stop of 1.2330 would have some buffer room over the 200-day SMA (currently at 1.2320), which is the next resistance level up. The long limit is very close to the rising trendline, but that is necessary to retain a viable risk/reward to survive a possible breakdown of the channel.
US - Event risk in the US next week will be centered primarily on the housing market, as new home sales and existing home sales growth are both forecasted to slow. Housing data has been mixed as of late, and most recently, housing starts unexpectedly gained while building permits - a leading indicator for the sector - dropped sharply. Meanwhile, the Richmond Fed index is anticipated to jump to -6 from -11 - in line with strong Industrial Production, Empire Manufacturing, and Philly Fed figures - as a weaker dollar boosts demand for exported goods. Durable Goods, on the other hand, could come in extremely weak following dismal retail sales readings for the month.
Switzerland - Event risk in Switzerland will be relatively high over the course of the week. First, producer and import prices are anticipated to build mildly, signaling that consumer price growth should remain positive. Next, the employment level for the first quarter will likely reflect tightness in the labor market, which has been a major driver of domestic demand and Swiss growth in general. The following day, the trade balance and KOF leading indicator will be released. The KOF leading indicator is anticipated to be quite encouraging given the resilience of consumption and trade, and with the SNB stating their desire to continue normalizing rates, a strong KOF figure may bring traders to price in a hike on June 14.
[B]Data for May 21 - May 28[/B] [B][/B] [B]Data for May 21 - May 28[/B] [B]Date[/B] [B]US Economic Data[/B] [B][/B] [B]Date[/B] [B]Swiss Economic Data[/B] May 22 Richmond Fed Index (MAY) May 22 Producer & Import Prices (APR) May 24 Durable Goods Orders (APR) May 24 Employment Level (1Q) May 24 New Home Sales (APR) May 25 KOF Swiss Leading Indicator (MAY) May 25 Existing Home Sales (APR)