The current price of the USD/CHF exchange rate is 0.9422 (March 30, 2021). This pair has rebounded dynamically in recent months. The last week is no exception. Therefore, we will look at statistical and technical analyzes.
Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.46% and -0.48%, respectively. Yesterday´s return was only 0.05%. Our scoring is currently neutral (0) for the month-on-month change and 0 for price indexation. This means that we are in the last ascending phase of the cycle. Both scorings range from -3 up to 3. The estimated cycles development based on our analytical systems is shown in the following chart.
Different moving averages (MAs) help us better identify trends across multiple time frames. We use 3 basic MAs to find out which sentiment dominates each horizon. The purple line represents the monthly, the green line the 6 months and the yellow line the annual moving average. According to all MAs, the USD/CHF is in bullish sentiment because it is above them. In the event of decline, monthly and annual MAs can be an important support for the exchange rate.
There have been more downward trends since the COVID-19 outbreak when we also recorded a medium-term maximum of 9 consecutive days. Upward trends did not exceed more than 5 days in the same period. The maximum range from the beginning of 2021 is 4 days in both directions. We could use the average ATR (Average True Range) obtained from daily data (0.74%) to estimate Stop Loss orders for our positions. The current value is 0.42%. Approximately 90% confidence interval (return between -1% and 1%) is shown in the histogram below by a red rectangle.
We could use the last decile of low to high returns (1.50%) to estimate Profit Targets, as shown in the chart below.
Basic technical analysis still supports bullish sentiment, as the exchange rate creates higher lows and higher high. However, we can clearly see the divergence between the market price and the RSI. The USD/CHF is currently also close to the supply zone (red rectangle) with a strong lower part, where the Fibonacci retracement level of 61.80% is. In addition, there is also a psychological level of 0.9500. This could be an important level of resistance for short-term bulls. A psychological level of 0.9300 could be another potential support for the exchange rate in the event of a decline.