- The U.S. dollar pulled back against the Swiss franc, noting resistance near 0.81 and support at 0.80.
- Despite short-term consolidation, I see signs of a bottoming pattern and prefer buying dips, avoiding any short positions.
The U.S. dollar has pulled back just a bit during the trading session on Thursday from the 0.81 level. The 0.81 level is an area that has been important multiple times, and now that we are hanging around here, we are testing a significant ceiling. If we can break above the highs of the trading session on Wednesday, it could open up the possibility of a move to the 0.82 level, where the 200-day EMA is located. Breaking above there would then open up a much bigger move, perhaps all the way to the 0.85 level, followed by the 0.88 level.
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Ultimately, that doesn’t necessarily mean we are going to suddenly take off. We could spend some time consolidating here, with the 0.80 level underneath offering support. The 50-day EMA is there as well, which is also something to watch. Nonetheless, I do think that we’re in the midst of a bottoming pattern, and Thursday’s move is probably just a bit of profit-taking.
Keep in mind that in this pair, there is one outlier, the Swiss National Bank, and what they may or may not do. They’ve threatened to intervene recently, and that means we’re getting closer to the bottom than not, because the Swiss are well known for jumping in and punishing anybody who buys too many Swiss francs.
With that being said, I am looking at dips as potential buying opportunities, and I have zero interest whatsoever in trying to short this pair. I just look at each dip as a potential opportunity to add to an already existing long position.
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