Daily Price Action

USDCHF Capped by Parity but Support Isn’t Far Behind


Like most currency pairs, the USDCHF was dependent on the outcome of last week’s U.S. elections. After carving out a low of 0.9550 on Wednesday, the pair catapulted higher to close the session at 0.9843, creating a huge bullish engulfing candle.

In the days leading up to the elections, the pair had sold off aggressively and closed back below a level I mentioned on October 7th.

But the USDCHF wasn’t alone. We saw similar false moves on the EURUSD and even AUDUSD and NZDUSD ahead of last week’s main event.

At the moment, the pair finds itself with just 50 pips of real estate between key support at 0.9950 and parity at 1.0000. As I type this, buyers are once again challenging parity on an intraday basis.

Notice how in the chart below, buyers failed to close a single day above 0.9950 in May, July and October. Last month’s retest even carved out a bearish pin bar from this level on October 25th.

Although yesterday’s session found sellers at parity, buyers managed a 0.9979 close. That makes it the highest daily close since early March. It also means that the 0.9950 area will likely act as support on a daily closing basis.

But with parity still acting as resistance, it would be prudent to wait for a daily close above this area before considering an entry. Otherwise, your risk to reward ratio could suffer.

A close above 1.0000 would expose the March high at 1.0090. Beyond that, we have the current 2016 high at 1.0255 followed by 1.0330.

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