USDCHF fell sharply yesterday, decisively breaking below its 100-hour moving average (blue line on the chart above) and extending beneath a key swing area defined by multiple lows from last week between 0.8097 and 0.81288 (see red numbered circles on the chart above). The pair remained below this swing zone for most of the session before finding support at a low of 0.80412 and rebounding modestly into the close.
In today’s trading, the initial bounce continued back into the swing area, where sellers leaned against resistance near 0.81288. The price then rotated lower again, reaching a session low of 0.8067 before buyers re-emerged. During the early U.S. session, bullish momentum pushed the pair above both the top of the swing area at 0.81288 and the 100-hour moving average at 0.81387. The price is currently hovering near this moving average.
If buyers are to assert more control, they need to hold above the 100-hour moving average (or at least the high of the swing area at 0.81288) and make a sustained push toward the falling 200-hour moving average at 0.81707.
Notably, USDCHF hasn’t traded above the 200-hour MA since April 3, when both moving averages were around 0.8825. Since then, the pair has plunged nearly 800 pips, signaling deeply oversold conditions and increasing the potential for a corrective rebound.
However, a recovery can only gain traction if price action reclaims and holds above both the 100- and 200-hour moving averages. Absent that, sellers will likely remain in control across short-, medium-, and long-term time frames.
Zooming out to the weekly chart below, the pair recently broke below a key floor area between 0.8333 and 0.8373 during the week of April 6 (see red numbered circles on the chart). That former support zone now acts as a new ceiling. If buyers are to regain broader control, they’ll eventually need to reclaim that level as well.
This article was written by Greg Michalowski at www.forexlive.com.