In my recent video analysis of USDCHF (CLICK HERE), I discussed the pair’s movement below the crucial 61.8% Fibonacci retracement level at 0.88186, coinciding with the testing of the Asian session’s swing low at 0.8791. I highlighted the risk for traders of a potential rebound above the 61.8% retracement level. However, following a break below 0.8791, the selling pressure intensified, driving the price down to the next significant support zone between 0.8728 and 0.87435. The lowest price reached today was 0.87314, barely 3 pips above the target low, before experiencing a bounce. Currently, the price has risen above the high end of this swing area at 0.87435, offering some relief to dip buyers.
For added confidence in a bullish reversal, traders would want to see the price climb back above 0.8791 and then surpass the 0.88186 level. On the flip side, if this bounce proves to be a short-term reaction from the support level, a fall back below 0.8743 and then 0.87283 could cause discomfort among buyers, potentially leading to a further decline towards the 0.8700 level.
The key takeaway is that understanding these technical levels acts as a roadmap for trading, providing insight into potential volatility and guiding more informed trading decisions, ultimately improving one’s trading skills.
This article was written by Greg Michalowski at www.forexlive.com. Source