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The US Dollar advanced against the Swiss Franc as we suspected after prices put in a bullish Piercing Line candlestick pattern. The pair has moved to test resistance in the 0.8859-64 area, marked by the 61.8% Fibonacci expansion and a falling trend line set from September. A break above this barrier on a daily closing basis initially exposes the 76.4% level at 0.8896. Near-term support is at 0.8829, the 50% Fib, with a move below that eyeing the 38.2% expansion at 0.8799.
Risk/reward considerations argue against entering long with prices sitting squarely at relevant resistance. On the other hand, taking up the short side looks premature without a defined bearish reversal signal. We will remain flat for now, waiting for an actionable opportunity to emerge.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com