USD/CHF does not appear to be breaking through the major technical resistance area!
Is it time to short the dollar against its safe-haven counterpart?
We take a closer look at the daily chart!
USD/CHF 1 Hour Forex Chart by TradingView
The US dollar does not appear to be maintaining its gains above the psychological level of 0.8700 against the Swiss franc although 10-year US Treasury yields extended their gains on Monday.
We don’t have to look far for answers. Optimism about US stocks is limiting demand for the US dollar, while uncertainty about the US election results may prevent some traders from buying US dollars.
At the same time, the relative weakness of the Japanese yen makes the Swiss franc a preferable alternative to the US dollar in the event of a risk-averse US dollar trading environment.
Remember that directional biases and volatility conditions in market prices are usually driven by fundamentals. If you haven’t done your homework on the USD and CHF yet, it’s time to check the economic calendar and stay up to date with daily fundamental news!
USD/CHF, which rose sharply in October, appears to have found a ceiling at the psychological handle at 0.8700.
Why not? The area is located around the R2 pivot point line (0.8635) which is not far from the 38.2% Fibonacci retracement mark of the downward swing from 0.9200 this year.
Bearish Japanese candlesticks and then sustained trading below the 0.8700 level exposes USD/CHF to a potential move down to the R1 (0.8545) pivot point area if not the 0.8500 psychological level.
But what if the USD/CHF bulls take a break?
If the USD/CHF pair rises back to the 0.8700 level and trades successfully and consistently above the resistance area, we could see a rise to the 0.8800 level if not to the areas of interest at 0.8900.
Regardless of which bias you end up trading, make sure you know the potential catalysts that could impact USD/CHF prices in the next few days!