USD/CHF remains above the pivotal Septemeber 2005 support level of 1.2250 where as EUR/USD has broken through that same resistance point of September 2005 at 1.2600. This demonstrates that USD/CHF has shown more resilience above this critical support despite numerous comments from the Swiss National Bank about future rate hikes, strong 2006 growth, and no oil impact on the economic recovery.

An interesting occurrence has developed on the Momentum indicator further substantiating the strength of 1.2250. The recent big push to 1.2250 registered the second lowest downward Momentum reading in two years and with the bullish candle formations, we should be looking to do a bit of light counter trend trading.

A closer look at the 4-hour chart shows a positively diverging RSI with month-long downtrend channel that served as support on two separate sell efforts below the 1.2300 level.

Those two sell efforts below 1.2300 were on the back of SNB's Roth commenting on the strength of the economy, future rate hikes, and a non-impact expectation of high oil prices. Both times the markets took the comments in stride after the initial reaction and rallied off the 1.2300 lows. The most recent rally forced us up and out from the parallel downtrend channel.

So with the overall dollar at similar support levels and EUR/USD showing so little interest above 1.2700 ahead of Thursday's and Friday's critical data releases, let's look to be long USD/CHF on the minor downtrend channel pullback to the .500 and .618 zone of 1.2340-30. Stops should be below 1.2315, initial target at 1.2380 to take partials and trail your stop to breakeven, and then hold on for dear life if you have enough cushion in the trade through the data releases to target the January 23 lows of 1.2553 as illustrated on the 4-hour chart.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

Disclaimer
The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.