The USDCHF is testing a significant level today. The 0.9850/60 area served as support between January and May of this year. It then attracted a bid during the November 15 retest.
But last Wednesday’s selloff put the pair back below the 0.9850/60 area. It attracted an influx of selling pressure during yesterday’s session and is doing so again today.
On the 4-hour chart, there appears to be a descending channel forming.
Whether or not this is a bullish continuation of the September/October rally is yet to be seen. It’s going to take a close above channel resistance near 0.9880 to make that happen.
That said, a daily close back above the 0.9850/60 horizontal area would be the first bullish sign. We don’t have it yet, but buyers are giving it their best effort as I type this.
If this turns out to be a bullish continuation pattern, a conservative target would be the 1.0100 handle. The area served as resistance between April and May of this year.
Keep in mind, however, that the pair would also likely encounter offers at 0.9940 and certainly 1.0030/40. These regions are easy to spot on both the daily and 4-hour time frames.
Key support comes in at 0.9770. The area kept the USDCHF range bound from late May to early October. As long as the 0.9770 area holds as support on a daily closing basis, the bullish scenario must be respected.
I’m going to remain on the sideline until bulls secure a close above channel resistance near 0.9880. If they fail to do so, I’ll look elsewhere. I’m in no hurry to trade, especially during the holiday season.