- The US dollar has rallied a bit against the Swiss franc during the early hours here on Monday, as we see a little bit of a recovery after the Friday shock of the US Chinese problems. That being said, I think this is a situation where we continue to see a bit of a base building pattern.
- I think this is very important to watch, quite frankly I think you have a scenario where we just formed a little bit of a double bottom and we are mostly positive over the last couple of weeks, especially after this hammer on September 17. So the question is, can we break above this resistance barrier? There is a barrier that has been both support and resistance right around that 0.81 level. It looks like we’re trying to take that on.
Bigger Resistance Just Above
If we can break above 0.8150, admittedly 95 pips from where we are as I record this, that’s an extraordinarily bullish sign. I think at that point in time, the trend starts to shift again. The US dollar is starting to fight back against most currencies. And quite frankly, if you look at the charts of the Euro, the British pound, the Japanese yen, the US dollar has been strong since the FOMC meeting as traders start to price in a different reality. Furthermore, if we do have some type of economic crisis, the US dollar will be where people run. The Swiss franc is a little bit different in that sense though, because they will also run here. So do keep that in mind. What that typically means is that if the US dollar does strengthen across the board, it does a little slowly against the Swiss franc. So, I’m not looking for an explosive move, but I am watching 0.81 because if we break above there, that’s a very pro US dollar signal more likely than not across the board.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
