Yesterday was perhaps the most important session for USDCHF since the October 26th breakout last year. The close above channel resistance that extends from the current 2016 high could mark the beginning of yet another 500-pip rally.
I mentioned this price structure over the weekend as one to watch as Friday’s session had tested resistance for the third time since late January. Monday’s session also tested the upper boundary of the channel but once again failed to close above it.
With yesterday’s close comes a fresh buying opportunity. However, a pullback to new support is needed to secure a favorable risk to reward ratio. A pullback would also allow for an entry that is closer to the mean, which currently resides just below the 0.9800 handle.
The first target for a move higher would be parity. The popular level has acted as a critical pivot since November of last year. A daily close above it would expose the March 10th ECB high at 1.0091 followed by current 2016 highs near 1.0230.
Taking a look at the broader picture, the wedge resistance that gave way last October was, in fact, respected as new support in April and May of this year. That means the measured objective at 1.1730, which is also the 2010 high, is still intact.
Of course, reaching an 1,800-pip objective would take months if not years rather than days and weeks. But regardless of the exact timeline, the 1.1730 handle does present a clue as to where USDCHF may be heading over the longer-term.
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