- The USD/CHF bounced a bit during the trading session on Wednesday, as we continue to see a significant amount of support against the Swiss franc at roughly 0.92 CHF.
- This is an area that has been important multiple times over the last couple of weeks, and I would also point out that we are perhaps forming a megaphone pattern.
- This is when you start to see lower lows and higher highs at the same time. In other words, volatility is starting to pick up and we could see an explosive move rather soon.
At this point, I look at a move above the 50-Day EMA as extraordinarily bullish, and it could very well send this market much higher, perhaps trying to reach the 200-Day EMA, which is currently the 0.9550 CHF level. The market breaking above there then opens the real possibility of 0.99, followed by parity.
Building Up for a Bigger Move
On the downside, if we were to break down below the 0.92 CHF level and open the possibility of a move down to the 0.90 CHF level. It should be noted that there is a lot of noise underneath that could be a bit of an issue. Because of this, I think you must look at this through the prism of a market that is going to continue to struggle to find its footing and bounce around. If we do break down from here, it’s probably going to be a slow-motion move at best.
The Thursday session could very well be important for the US dollar, as we have the Consumer Price Index figures coming out of the United States, giving us a bit of a read on consumer inflation. Keep in mind that the Federal Reserve has stated that it’s their goal to drive down inflation, which typically means that they are going to keep monetary policy type, thereby driving up the value of the US dollar as a knock-on effect. When we get this announcement, I would expect a lot of noise, but if it is decidedly hotter than anticipated, we really could see the US dollar takeoff. Obviously, the exact opposite is also true. With this being the case, I do think we are building up for a bigger move in one direction or the other.
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