Yesterday, the USDCHF was trending lower, with the pair down by 1.82% for the week, marking its most significant decline since the week of November 7. Examining the hourly chart, the price had fallen below a downward sloping trendline, and I suggested that the price needed to rise above that trendline at a minimum (see post from yesterday HERE). Furthermore, the 38.2% retracement of the decline from this week's high to the low at 0.89587 was identified as another upside target necessary to give buyers more control. Specifically, I wrote:
If the price is to start to rebound, getting back above that trend line (it is moving lower) is the minimum target to get back above. On a break above that area, and traders will look toward the 38.2% at 0.89587 on the hourly chart above. Those hurdles would be needed to be broken to give buyers some hope the selling may be over.
Fast forward to today's trading, the price initially dipped lower during the Asian and early European sessions but reversed course as the US dollar strengthened following hawkish comments from Fed's Waller and a jump in the University of Michigan's 1-year inflation expectations to 4.6% from 3.8% last month. Technically, the trendline was broken near 0.8911, completing the first step. The next step was to reach and surpass the 38.2% retracement level.
As seen in the chart above, the price has risen to the 0.89587 level, but encountered sellers during the first test. Today's high reached 0.89584, and the current price is at 0.89528.
What's next?
The 38.2% retracement of the week's trading range remains a minimum target to reach and break. Above that, the subsequent target is the 100-hour moving average at 0.89827, followed by the 50% retracement of the same downward move at 0.89894. Fail to do that, and the correction is a plain variety one, and that could lead sellers reentering.
Key test. Key level for the USDCHF being tested.
