USDCHF caught between a rock and a hard place

Since the February low, USDCHF has been grinding higher in a rather unsatisfying way. Yet if we are to clear the next technical hurdle nearby, it could open-up the playing field for momentum traders to embrace.

We can see on the daily chart that, whilst in a bullish trend, it has at times been a little choppy. This has largely kept it off-of our watchlist as we prefer to see minor retracements interconnected with clear phases of range expansion. Still, it’s climbed to a 3-month high and Tuesday’s range expansion session closed above its 200-day average for the first time since January. Perhaps things are starting to look up (no pun intended).

However, there’s a clear zone of resistance nearby which could supress the rally once more. Yesterday’s high was halted by the Jan 9th low of 0.9699, and at 0.9713 sits the 61.8% Fibonacci retracement.  Add into the mix the 50-week average at 0.9690 (not pictured) and the resistance zone sits between 0.9669/713. With yesterday’s range essentially sandwiched between the 200-day average and the resistance zone, you could say its caught between a rock and a hard place. So, we’d need to see a clear break of 0.9699 at the very least or 0.9713 for added confirmation before considering a long setup. If we can clear the resistance zone it brings the 0.9845 high into focus with a relatively unobstructed view.

Zooming into the four-hour chart the bullish trend is clearer to the eye. We also note a breakout from 0.9760 after printing a prominent higher low, and it’s also encouraging to the bull-camp that it’s since been respected as support.

If bearish momentum returns and resistance holds, there’s not much for us to do other than look elsewhere. But to take that a step further, if we see a clear rejection of resistance and break of the bullish trendline, bears would be likely licking their lips for a short position. But if you prefer to trade with the trend, it’s probably safer to wait for a break above 0.9713 with a view to target the 0.9845 high.