A week ago today, the USD/CHF pair broke to the upside and broke out of the “red box” that trapped the pair back to August 20. The US jobs report was the catalyst for the move to the upside, but by Monday, the price had fallen back to the top of that “red box” and moved within the upper edges of it.
Sellers were supposed to enter on this breakout, but momentum was very modest, and sellers turned back to buyers on Tuesday and reached session – and week – highs late Wednesday and in Thursday trading. These highs reached a swing zone between 0.86078 and 0.8619. The high price reached 0.86067.
Yesterday, control returned to sellers and the price moved towards the middle of this week’s trading range. The current price is trading at 0.8576.
What’s next?
Price action in USDCHF this week has pushed the trading range to a new higher level.
- At the bottom, the old ceiling did its job of holding support (give or take a few pips) at 0.85368. Today – and at the beginning of next week – staying above this level is necessary to keep buyers in the market. If the price returns to the red box, sellers will be back in control, and I expect the price to move back towards the 100 and 200 bar moving averages on the 4-hour chart.
- On the upside, the swing zone dating back to the first half of August has done its job of holding resistance at 0.8619. Today – and the beginning of next week – it is necessary to move above this level to add more bullish slope. It is also important to break above the 38.2% retracement level at 0.86312. If this level can be broken, it opens the uptrend for more momentum.
So instead of the trading range between 0.8400 and 0.8536, the new range is 0.8536 to 0.8619 and future traders will come back looking for the next push. Will it be higher or lower?