The USDCHF moved higher into the US session and in the process moved above the 38.2% of the last trend move lower that saw the pair moved from 1.0063 to 0.95442 (on May 27).
Since that bottom, the price consolidated in a narrow range between 0.9544 and 0.9669 and traded above and below the 100/200 hour MAs. The price moved above those converged MAs on Friday, corrected to the same MAs yesterday, before racing outside the “red box” (and the 0.9669 level).
Today, the pair based near a higher swing area between 0.96948 and 0.9711 before moving to a high at 0.97782. That move took the price above the 38.2% retracement at 0.97426, and another swing area between 0.97488 and 0.97636.
However momentum is faded with the overall dollar decline seen in the US morning session, and that has pushed the price back below the 38.2% retracement.
Getting back above the 38.2% retracement and still a key barometer for buyers and sellers. After a trend move (him in this case lower from the May 16 high), that 38.2% retracement becomes a minimum if the countertrend traders are to take more control.
Absent a move that breaks the 38.2% retracement and stays above, and the correction is okay, but not great.
Instead of thinking about breaking the retracement target and moving higher, the retracement level may now be re-established as resistance.
So watch the 0.97426 for clues now. Stay below and the correction party may be over for now at least.
Conversely, a move below 0.96948 to 0.9711 area would increase the bearish bias and have traders looking toward the red box again. Him