The USDCHF fell sharply yesterday and in the process, moved below the 50% retracement of the move up from the June 29 low at 0.9689 and a swing low level going back to July 6 at 0.9669. A channel trend line was also broken.
However, momentum stalled ahead of the 61.8% retracement of the same move higher at 0.96437 (low reached 0.9653) before moving back higher into the close yesterday. The price closed at 0.9687 just below the midpoint level.
In trading today, the price has been trading above and below the 50% retracement. For the 1st half of the day, the price stayed below the level but could not extend below the 0.9669 level. In the European morning session, the price has traded mostly above the midpoint level extending to a high price of 0.97158.
On the topside a swing area between 0.9723 and 0.97314 is a topside target on further momentum (see red numbered circles). Like the 61.8% retracement below, the move higher fell short of reaching on that target.
The last few hours has seen the price move back down toward the closing level from yesterday and the 50% retracement level. We are currently trading below both those levels at 0.9686. The up and down waffle continues.
Yesterday, the range for the day was 131 pips. That was well above the month long average of about 83 pips. Today the range is the opposite with only 42 pips from low to high compared to the 83 pip average. The market is taking a breather.
Nevertheless, there is room to roam, but with the price trading between support and resistance and with plenty of up and down price action, the question is dollar higher or dollar lower?
Given the sharp decline yesterday, traders hope that they are rewarded for the break and run. They took back control below the 0.9723 – 0.97314 swing area, and have been able to stay below that level on the corrective move today. So, for sellers that area represents the risk.
Conversely dip buyers (or longs) would want to see a move back above that resistance area to give them more confidence the low is in place.
On the downside a break below 0.9669 would make the longs more nervous, and have traders looking again for the 61.8% retracement at 0.96437.
