USDCHF bulls have struggled to close the pair above 0.9800 on a daily closing basis. That’s the level I mentioned on the 28th of September as one that could restrict upside potential.
The 0.9800 price level is just a placeholder. Because we’re dealing with a trend line that extends from the current 2017 high, the actual price is somewhat of a moving target.
On Friday of last week, the USDCHF carved a bearish pin bar from this trend line. I know some of you were anxious to short the pair for a move back toward range support at 0.9435. And that may work out well for you.
However, sellers failed to close Friday’s session back below the 0.9770 horizontal level. That means if you sold the pair anywhere above this level, you were selling into key support which is never a good idea.
Just like the USDJPY that we discussed yesterday, the price action has been relatively stagnant. The trend line from the current 2017 high was attracting sellers near 0.9800/20 while the 0.9770 area was attracting bids.
Since the time I started writing this post, sellers have taken prices well below 0.9770 support. That means today’s close at 5 pm EST become a critical factor in determining the likely path forward.
If sellers secure a close back below horizontal support at 0.9770, we could see the pair slide back toward 0.9435.
On the other hand, a close above trend line resistance near 0.9800/20 would suggest a continuation of the September rally and expose key resistance at 1.0100.
Keep in mind that the USDCHF is coming off of multi-year range support at 0.9435. The level has been instrumental in directing price action since August of 2015. That means any push lower from current prices could encounter significant buying pressure on the way down.
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