Potential signal:
- I am a buyer of the USD at this level. I am aiming for a 60 pip move to the upside and am putting a 45 pip stop loss on.
- I am looking to reach the 0.0840 area.
The US dollar initially rallied a bit during the trading session here on Friday but gave back gains rather quickly. The 0.80 level is a large round psychologically significant figure that a lot of people will be seeing and a bit of a magnet for price as you can see at this point, I think you have to look at this as a market that will be trying to sort out where to go next. And that means that we have to expect a lot of sideways action. With that being the case, I think you also have to understand that if we do break down, we have even more support below, especially closer to the 0.7900 area.
Support Just Below
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With that being the case, I think the downside is somewhat limited, although clearly anything can happen. With this being the case, I think we probably continue to see a lot of noise. And if we do rally from this point, the 50 day EMA is something that we need to pay close attention to. Breaking above there then opens up the 0.81 level.
The 0.81 level of course is an area that previously had been support so for it to be resistance wouldn't be overly surprising either. With that I think you open up the possibility of the market just moving from one handle to the next here in about a 200 point range. I do recognize that there are a lot of concerns around the world right now and that favors both of these currencies if that keeps up to be honest with you. So even if the US dollar takes off to the upside against the Swiss franc, it's very possible that it will be more of a slow grind than anything else. I don't think the Swiss franc is going to get eviscerated anytime soon, and therefore I remain somewhat neutral, but this makes a great scalping environment.
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