Overhead technical halts the rally

The USDCHF bottomed on Friday, and has closed higher on the last three trading days. Today, the price reached another high (traded at the highest levels since June 27th) but the rally came to an end, and the price is currently trading below the close from yesterday at 0.9653 (currently trade at 0.96478).

The high price today reached 0.9687 (the low on June 30 reached 0.9552). At the peak,

  • the pair tested the 61.8% of the move down from the June 15 high at the same 0.9687 level.
  • Also at the 0.9688 level was a trend line on the hourly chart.
  • A little higher at 0.09690. sits the 200 bar MA on the 4-hour chart.
  • A little below the high sits the 100 bar MA on the 4-hour chart at 0.96777

The cluster of resistance stalled the rally. Why not? Risk was defined and limited. Traders used the level to lean against (either taking profit or setting new shorts).

Now what?

Yesterday, and earlier today, the price moved above and then corrected to, the 200 hour MA at 0.96335. The price based near the level and that helped to propel the price to the high resistance area. We currently trade at 0.9648.

As the Fed minutes approaches, I would expect that traders would use the 0.9633 as the risk defining level for longs/buys. Stay above, could see a rotation back to the cluster of resistance. A move below and I would expect the dip buyers to sell out and take a small loss.

The Fed minutes are ahead. The Fed members have spoken about starting to taper the QE. You What is not so certain is whether a September hike is coming. As Adam points out the probability is only around 22.1%. I am not expecting much of a reaction but if support is tested, it should be a low risk buying opportunity.

Digest the news for any big dovish surprises. If not buyers should re-enter for another run to key resistance.