If you’re looking to jump in on the dollar’s rally, then you’ll want to check out this retracement play on USD/CHF’s daily time frame.
As you can see on the chart below, USD/CHF just got rejected from the 1.0200 major psychological handle, which also happens to line up with last week’s high and this week’s top ATR.
If you’re like me and you’re also a long-term dollar bull, then you’ll know that the .9950 is one of the sweetest spots to enter a long trade at this point. Not only is the minor psychological handle near a 38.2% Fibonacci retracement level, but it also marks a resistance that had been solid for most of the year.
The question is, will the dollar even drop back to the level? All eyes will be on Uncle Sam’s NFP report today, and analysts are expecting strong results that would all but confirm a Fed rate hike before the year ends.
If the report prints another upside surprise, then USD/CHF might break above this week’s highs and continue its uptrend without looking back. On the other hand, a worse-than-expected NFP release might just be the catalyst we need to take the pair back to its previous resistance area.
I’m not placing any trade before the actual NFP report, but I’ll be on the lookout for a possible trade opportunity. I’m thinking of buying at a break above recent highs or maybe placing orders around the Fib retracement levels.
What do you think? Will the dollar’s rally lose steam long enough to show a decent retracement? Or is USD/CHF’s trip back to its weekly open price all the retracement we’re gonna get before it goes on its merry way up?
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