The USDCHF on Friday and again yesterday stalled against the 38.2% retracement of the move down from the mid-August high at 0.85172. The inability to get above that level gave the sellers a go-ahead to push lower. That downside momentum continued through support near 0.8475 where a cluster of moving averages were near converged.
Today the price rebounded back above those moving averages, but could not sustain momentum, and when in the US session today, the USD selling took the price back below the cluster of MAs, buyers once again turned to sellers.
The price is now back down testing the Thursday and Friday lows which came in at 0.84486 and 0.8451. THe low price just reached 0.84515.
The dip buyers can lean against that level with a stop on a break below. Conversely, shorts (or traders who may be short on the break of the cluster of moving averages from earlier today), would want to see that 0.84486 level broken and stay broken with momentum toward the next downside targets..
When the price action is up and down over an extended period of time (and the USDCHF has mainly traded between 0.8400 and 0.8537 since August 22), traders need to trade the technical levels and hope that the price breaks, lead to more momentum in the direction of the break. If it happens, great. Look for the next target. However, the pattern of ups and downs can continue and lead to a rotation in the opposite direction (once again).
At some point, the price will get out of the trading range and hopefully trend, but for now, the ups and downs continue above and below the near midpoint levels (and other swing levels).
This article was written by Greg Michalowski at www.forexlive.com.
