- The US dollar has gone back and forth during the trading session here against the Swiss Franc as we continue to bounce around just below the 0.80 level.
- This is obviously a larger psychologically significant figure than a lot of people will be watching.
- Therefore, it’s not overly surprising to see that we can’t quite break above it.
The interest rate differential does favor the U S dollar, but everybody and their mothers are looking for the U S dollar to fall. So, you are seeing a lot of pressure with that being said, I’m watching the 0.79 level very closely because it has offered a bit of a floor, at least so far with that being said, I am looking at this as a market that quite, frankly, will end up being one that has to make quite a bit of effort to break down. And if and when it does, then I want to be a part of that.
History Suggest Support in this Area
However, you can also look at this as a market that’s in a bottoming pattern based on historical pricing. We will just have to see. You can see that there is a little bit of a bearish pennant in this market. And if we were to have a breakdown here, the market could at least in theory drop down to basically 0.76 or 0.7650. We’ll just have to wait and see if we break above the 0.80 level on a daily close that does change a lot of things, and it could be the beginning of a turnaround.
The interest rate differential favors the US dollar, so it does pay you to wait, and I am the first to admit that I have gone a long couple of times here taking short term trades. But I think at this point in time, really what you need to do is pay attention to this pattern and watch whether or not it breaks in the pattern’s favor or if it invalidates it. Remember, some of the best trade setups are failed patterns. So that is worth watching. Also watch the US dollar against other currencies. In general, it tends to move in the same direction against everything.
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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.