Talking Points
- October price action suggests remains constructive- Pair at key resistance
- Sunday-open gap filled- cautiously bullish above weekly range
- Key near-term resistance range 9165-9172- scalp bias at risk below this threshold
USDCHF Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
- USDCHF October opening range break keeps focus on the long side
- Break back above former trendline support dating back to 2012- Constructive
- Daily RSI breach above 50-threshold suggests momentum building
- Key Resistance 9172- Breach targets objectives at Channel Resistance, 9300
- Interim Support 9080- Scalp bias Bullish above this mark
- Bullish Invalidation at weekly low 9065
- Key Events Ahead: US Debt Ceiling / Gov’t Shutdown debate
USDCHF Scalp Chart
Notes: Longs were initiated at 9067 in DailyFX on Demand on Tuesday as the pair came into channel support with portions closed out at 9085, 9125, and 9170. The Sunday open gap-fill and subsequent break higher further supported our bias and we’re still holding a core position against 9100 after running into the interim resistance range 9165-9172. While the opening ranges of the week & month have continued to support our topside bias, the pair has now run into key resistance and long scalps should taken with caution below this mark. Look for the pair to trade softer in the near-term with the pullback likely to offer more favorable long entries lower down.
Note that an inverse head & shoulders seems to be in the making with a Tuesday’s rally breaking through the neckline. As such, the topside prospects for the pair are well warranted with longer-term objectives eyed at 9300. Daily RSI has broken above the 40-threshold for the first time since mid-June with the first 50-breach since late August and remains constructive on the approach. Look for the signature to break above trendline resistance dating back to July for further conviction on our medium-term directional bias. Also note that markets remain fixated on the ongoing drama unfolding in Washington with headlines regarding the ongoing debate likely to fuel volatility in USD based pairs until a resolution is reached.
* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.
Key Threshold Grid
|
Entry/Exit Targets |
Timeframe |
Level |
Significance |
|
Bearish Invalidation |
Daily / 30min |
9165 – 9172 |
61.8% Fib Ext / 23.6% Retracement |
|
Break Target 1 |
30min |
9200 – 9210 |
1.618% Fib Ext / 50 % Retracement |
|
Break Target 2 |
30min |
9227 |
100% Fibonacci Extension |
|
Break Target 3 |
30min |
9268 |
61.8% Retracement |
|
Break Target 4 |
Daily / 30min |
9300 |
38.2% Retracement |
|
Break Target 5 |
Daily / 30min |
9330 |
1.618% Fib Extension |
|
Support Target 1 |
30min |
9245 |
50% Fib Extension |
|
Support Target 2 |
30min |
9128 |
100% Fib Extension |
|
Support Target 3 |
Daily / 30min |
9080 – 9085 |
61.8% Fib Extension / 23.6% Retrace |
|
Bullish Invalidation |
30min |
9065 |
Weekly Low |
|
Break Target 1 |
30min |
9046 |
61.8% Retracement |
|
Break Target 2 |
30min |
9012 |
Last Week’s Low / 78.6% Retrace |
|
Average True Range |
Daily |
68 |
Profit Targets 16-18pips |
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---Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
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