USDCHF bounces higher after testing support targets at tail end of last week. What now?
The USDCHF moved lower last week, and in the process tested an important swing area between 0.80090 and 0.80178 (rednumbered circles on the chart below) on both Thursday and Friday. The decline also reached the 38.2% retracement of the rally from the May 29 low to the June 24 high, a level that came in just below the swing area at 0.80074.
The buyers responded each time. The pair found support at 0.80090 on both days before bouncing higher, reinforcing the importance of that support zone. As long as the price remains above that area, buyers can argue they successfully defended a key technical floor.
The rebound has extended into today’s session, with the price now challenging the falling 100-hour moving average at 0.80615 (see the 100 hour moving average on the chart below). That moving average is reinforced by another swing area between 0.80620 and 0.80699 (green numbered circles), making this a key resistance zone and the next important test for both buyers and sellers.
From a trading perspective, the technical picture offers well-defined risk. Sellers can lean against the 0.80620 to 0.80699 resistance area, using a stop on a sustained move above 0.80699, while looking for the pair to rotate back to the downside.
For buyers, the objective is clear. A decisive break above the resistance zone would target the 200-hour moving average at 0.80805. If bullish momentum carries the price above that level, it would strengthen the technical outlook and open the door for another run toward the highs from the past several weeks, with 0.81389 becoming the next key upside target.
This article was written by Greg Michalowski at investinglive.com.