Weekly Close: 0.9816
The USD/CHF , in the shape of a full-bodied candle, soared to highs not seen since late August last week. Managing to overthrow its 2018 yearly opening level at 0.9744, the pair is in a healthy position to continue north this week and test a notable priced in at 0.9984-0.9894.
Before reaching the aforesaid weekly supply, however, daily buyers need to contend with a potentially hard-wearing at 0.9866-0.9830. Aside from this area delivering solid downside momentum from its base, it was effectively the decision point to break through support marked with two black arrows around the 0.9855 neighbourhood. For this reason, the area commands attention!
Intraday flow struggled to maintain its presence amid Asia/London trade on Friday, dipping beneath 0.9750 to lows of 0.9737. At the closing stages of the week, though, broad-based USD buying kept the USD on the winning side of the table against the Swiss franc , closing out firmly above its 0.98 handle.
Overhead, traders might want to pencil in the seen nearby at 0.9846-0.9829, tailed closely by a Quasimodo at 0.9854. Both barriers carry equal weight, as both are sited within the confines of daily supply mentioned above at 0.9866-0.9830.
Areas of consideration:
While we would agree weekly price portends further upside in this market this week, the combination of daily and H4 supply is likely to hinder buying. With that being the case, traders are urged to keep eyeballs on the H4 Quasimodo at 0.9854 for possible shorts this week.
Why not the H4 supply seen below it at 0.9846-0.9829? Of course, this area equally has the potential to hold price action lower, though we’re selecting the level that offers the best bang for our buck. Shorting from the noted Quasimodo not only allows traders to position stops above the current daily supply, it also brings in stops taken from above the H4 supply to sell into (stops taken from sellers are automatically buy orders).
A move from 0.9854 to 0.98 offers incredible risk/reward conditions, nearly 4 times the position risk, assuming one places the stop two pips above the daily supply at 0.9868.
Today’s data points: FOMC member Bostic speaks; US ISM manufacturing PMI.