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USDCHF: Daily Close Above 0.9800 Needed to Extend Gains

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The U.S. dollar is beginning to gain momentum across the board. It certainly isn’t an all-out bull move, but it is the most bullish momentum in quite some time.

Yesterday we discussed a potential breakout on the USDCAD daily chart. We’ll know soon enough whether buyers intend to uphold Wednesday’s close above 1.2420.

The USDCHF is another dollar pair that’s on the move. I don’t talk about this one often, mostly because of the choppy price action compared to other pairs like the USDCAD and USDJPY.

However, the pair has been carving what could be a major swing low since testing 0.9435 in mid-July. Since that time the price action has been range bound between 0.9435 support and 0.9770 resistance.

Here is a look at the weekly chart which shows the 900 pip range that’s been in place since 2015:

USDCHF weekly chart in 900 pip range

As long as the 0.9435 support area is intact, the USDCHF is range-bound. Traders should also respect the bullish connotations of this range, particularly given the bounce higher over the last three weeks.

There are two key levels I’m keeping an eye on at the moment. The first is the horizontal level at 0.9770. The area has capped every advance since the pair closed below it on May 19th.

It’s also the 38.2% Fibonacci retracement when measuring from the December 2016 high to the current 2017 low.

The second level of interest is the trend line that extends from the current 2017 high at 1.0334. Because this trend line begins at such a prominent high, chances are it will become a factor if tested.

Even if we do get a daily close (5 pm EST) above this confluence of resistance near 0.9800, I’ll need some additional confirmation before considering an entry.

As I mentioned at the beginning of this post, the USDCHF can be choppier than other U.S. dollar pairs. The choppy price action can lead to an increase in false breaks. One way to combat that is to wait for confirming price action such as a pin bar.

I’m going to stay on the sideline for now. A daily close above the 0.9800 area followed by bullish price action during the retest could make for an attractive setup. Alternatively, a close below range support at 0.9435 would shift my focus lower.

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USDCHF daily time frame with area of resistance

Leave a Comment:

9 comments
Michael says

Thank you Justin! I always look forward to your analysis and enjoy every bit of it. Currently saving up for DPA membership. See you on the inside.

Reply
    Justin Bennett says

    You’re welcome, Michael. Hope to see you in the member’s area soon. Cheers.

    Reply
Roy Peters says

Looks like a double bottom from support? Of course price must break the trendline to complete the pattern.

Reply
    Justin Bennett says

    That’s the basic idea. It’s one reason I like 1.0100. Both ranges have a distance of approximately 330 pips.

    Reply
Lilian Ho says

Hi Justin, does being a member give us the privilege of seeing your entries and exits where we can try follow?

Reply
    Justin Bennett says

    I do occasionally mention when I’m getting in, but it certainly isn’t a signal service. If I just told member’s what to do and when to do it, there would be no reason to learn. The goal of DPA is to create independent (self-sufficient) traders. The only way to do that is by putting in the work and making mistakes along the way.

    Reply
sam says

you are too much!

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Dennoh says

Thank you for this. I am grateful.

Reply
    Justin Bennett says

    You’re very welcome.

    Reply
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