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USDCHF Buyers Challenge Friday’s Bearish Pin Bar

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USDCHF bears are having trouble following through on Friday’s pin bar from 0.9940 resistance. The area has served as a pivot since late October and had its way with the pair during the final 24 hours of last week.

I mentioned the bearish pin bar over the weekend. And although it’s well-formed, I did point out how it developed on a Friday when volume tends to be lighter than usual.

That means it may not be as reliable as other pin bars that form during the week. Think of buy and sell orders as votes by market participants. The fewer votes there are, the more likely a pattern is to fail.

This is why the price action in late November and December tends to become choppy and indecisive. With many of the heavy hitters taking a backseat until the new year, those ‘votes’ are harder to come by.

If I were short from Monday’s retest of 0.9940 as new resistance (which I’m not), today’s price action would have me a little nervous. It seems sellers are struggling to garner enough follow through to push prices lower.

That isn’t much of a surprise, though. On Sunday I commented that “a return to 0.9850 or at least 0.9880 seems likely”. Today’s low so far is 0.9889, just nine pips above the minor support at 0.9880.

We know the USDCHF broke free from a descending channel last week, so the potential for a bullish move is apparent. We also know that the objective for such a break is the multi-year range top at 1.0330. It’s a lofty target, but the technicals are convincing. See link above.

But here’s the thing…

On Wednesday at 2 pm EST, we have a key Fed rate decision and statement. That’s a little more than 24 hours from now. As such, taking a position or even holding a previous one into Wednesday’s events is a risky proposition.

I’m still interested in another long position if the pair can clear 0.9940 on a daily closing basis (using New York close charts). But not until the dust settles following Wednesday’s FOMC.

If on the other hand, the pair falters tomorrow, the next key support comes in at 0.9850. This is the area that triggered last week’s buying opportunity after closing above it on December 5.

Above 0.9940 we have the October and November highs at 1.0037. A daily close above that would take us back to the April and May highs at 1.0100.

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USDCHF descending channel on daily time frame

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1 comment
Chien says

Thanks you, Justin!

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