On October 25, I wrote about the potential for a USDCHF rotation lower.
The pair has been trending higher since reaching the 0.9840 support area.
However, the recent break below ascending channel support on October 17 looked ominous for bulls.
The USDCHF was also coming into that 0.9930/50 resistance area last week.
I mentioned how the resistance area could extend as high as 0.9950 in Saturday’s Forex forecast video.
Notice how both Monday and Tuesday failed to close above 0.9950.
Furthermore, today’s session is back below 0.9930 on a 4-hour closing basis.
That could hint at continued weakness, but I would like to see USDCHF close today below 0.9930 to help solidify the idea of a rotation lower.
As I mentioned last week and again on Saturday, a move lower from current levels could find its way back to 0.9840.
That’s where USDCHF bounced last week.
A close below that 0.9840 level would open the door to the next key support around 0.9760.
The 0.9760 area isn’t as apparent as others, but the weekly time frame illustrates its significance, particularly the period between May and September 2017.
As of now, a daily close back below 0.9930 would suggest that the area will attract sellers going forward.
It could also set up a short opportunity for a move back to 0.9840.
On the other hand, a daily close above 0.9930 could offer a buy signal in the form of a pin bar.
It would even carve an inside bar pin bar combination given the range of Tuesday’s candle in relation to Monday’s.
So as you can see, today’s close at 5 pm EST will be key.
But before you rush off to trade the pair, I want to share some general thoughts about USDCHF.
Compared to most of the other currency pairs I’ve discussed lately, USDCHF has a reputation of being choppy and indecisive.
When dealing with a market like this, it’s usually a good idea to wait for additional confirmation, such as a close back below 0.9930.
Another way to handle more indecisive markets is to scale back on your position size.
Instead of scaling up to 2% of your balance, why not use a max risk of just 1%?
Of course, a third option is to stand aside and look elsewhere.
There are other opportunities out there that may better suit your trading style and personality.
Furthermore, we have a Fed rate decision and statement today at 2 pm EST with a presser 30 minutes later.
That alone is an excellent reason to avoid USDCHF for now.
We’ll have to wait and see where today closes, but I do think a sub 0.9930 print at 5 pm EST (New York close charts) would seal the deal for a move lower.
Key support on the way down comes in at 0.9840 followed by 0.9760.
Alternatively, a daily close above 0.9930 and especially 0.9950 would keep buyers in control a while longer.