There is some life in the USDCHF, but it is still in intensive care. Buyers have pushed the price above the 100-hour and 200-hour moving averages. That gives them a more bullish bias and a clear area to defend. What is missing is stronger upside momentum.
In the video above, I look at the levels that will tell us whether this recovery can gain strength or whether sellers get another shot. The moving averages define the risk. Last week’s high provides the upside objective if buyers can keep control.
Yesterday, the USDCHF heartbeat was nearly flatlined as the hourly moving averages converged. Today’s supplied chart shows the price above both averages, trading near 0.83291. There is a pulse. Now buyers need to build on it.
The moving averages are the barometer
The immediate support levels are:
- 200-hour moving average at 0.83181: The first support level on a rotation lower.
- 100-hour moving average at 0.83082: The lower boundary of the moving-average area buyers need to defend.
Stay above both, and buyers retain the near-term advantage. A dip toward the averages is not necessarily a problem if buyers lean against support and push the price higher again. That would show they are willing to defend the recovery.
However, getting above a moving average and developing a trend are two different things. Buyers have taken the first step. They still need follow-through.
What must buyers do next?
Buyers need to keep the moving-average area underneath the price and turn that support into further upside progress. If they can do that, the high from last week at 0.83837 becomes the upside target.
That high is a target, but it is also a decision level. Reaching it would not automatically confirm another leg higher. Buyers would need to get above and stay above to extend the bullish story.
For now, the question is more immediate: can buyers defend the averages and find the momentum to move away from them? Holding support keeps the recovery alive. Moving higher shows that recovery is gaining strength.
What would give sellers another shot?
A move below the 200-hour moving average at 0.83181 would be the first sign that buyers are losing some of their advantage. The 100-hour moving average at 0.83082 would then become the next test.
Between the two averages, the picture becomes less decisive. Buyers would have lost the first support level, but sellers would still need to break the lower average to take more control.
Move below both and stay below, and the recovery would lose its immediate technical foundation. The next downside areas are:
- 0.82636 to 0.82740: A swing area below the moving averages.
- 0.82250: A lower swing level if sellers extend the decline through that area.
Those are conditional targets. Sellers first need to get through the moving averages and show they can keep the price below them.
Trading education: A pulse is not the same as momentum
There is a useful trading lesson in this setup. A move above the moving averages changes the near-term bias, but the break needs to be defended. Otherwise, the first sign of strength can turn into another failed recovery.
The averages give traders a reference where risk can be defined and limited. If the bullish idea depends on holding above them, a sustained move back below both is a reason to reassess that idea.
Watch the sequence: get above, stay above, and then make progress toward the next target. The first step gives the recovery a pulse. The next two tell us whether it has strength.
For the USDCHF, stay above 0.83181 and 0.83082 and buyers retain the advantage, with 0.83837 the upside objective. Move below both and stay below, and sellers get another shot toward 0.82636 to 0.82740.
There is some life, but buyers have more work to do.
This article was written by Greg Michalowski at investinglive.com.