The USDCHF breaks to the downside this week, taking the pair outside it’s range. What next?
The USDCHF fell sharply this week, helped by the fundamental catalyst of U.S. Treasury buying and the subsequent selling of the U.S. dollar. The move pushed the pair below the value area that had contained most of the price action over the past two-plus months, giving sellers greater technical control.
More specifically, the price broke below a swing area between 0.8029 and 0.8034, and then through another swing area at 0.8009 to 0.80178. The selling continued on Thursday with a break below the 100-day moving average, but downside momentum stalled near the 61.8% retracement at 0.79519. The low reached 0.7949 before buyers stepped in and pushed the price higher late in the session.
In trading today, the price action has been more up and down, but importantly, the broken swing area between 0.8009 and 0.80178 has held as resistance both late yesterday and again today. That makes the area a key short-term barometer for buyers and sellers.
As long as the price remains below 0.80178, the bias remains in favor of the sellers. Also in play is the 0.8000 level, which the price is currently trading above and below.
That sets the short-term technical roadmap. A move back above 0.80178 would give buyers more confidence and shift the focus toward the next swing area at 0.8029 to 0.8034. Conversely, staying below 0.80178 keeps sellers in control and puts the 100-day moving average at 0.79747 back in play. A break below that moving average — and the ability to stay below — would increase the bearish bias and open the door for another run toward this week’s lows.
In the video above, I outline the technical levels in play, explain why they are important, and show what buyers and sellers need to do to take greater control.
Meanwhile, US stocks are higher in early trading but off the premarket levels. The Dow industrial average is up 260 points or 0.50%. The S&P is up 0.35% and the NASDAQ index is up 0.25%. The NASDAQ 100 index is up also up 0.25%.
This article was written by Greg Michalowski at investinglive.com.