The USDCHF made a strong comeback after dropping below 0.79197 early in the European morning. This rebound led to a rise, bringing the pair to its first resistance zone between 0.7938 and 0.7947.

Resistance Analysis

To give buyers a stronger position, the price needs to rise above this resistance area. If the upward trend continues, the next targets will be the swing high at 0.7947, the 100-bar moving average at 0.7967 on the 4-hour chart, and the 100- and 200-hour moving averages near 0.7986. Even with the bounce, sellers are still in control unless buyers break through these resistance levels. On the downside, sellers will remain dominant if the price stays below 0.79197. Currently, the USDCHF is trading at levels not seen since 2011, marking these as extreme points. Buyers need to maintain their momentum by surpassing these resistance levels. Last week’s rally peaked at 0.80628 but did not reach the 38.2% retracement of the decline from the May high. For ongoing updates, visit investingLive.com, where daily detailed analysis is available. The sharp rebound after the breakdown serves as a crucial test for derivative traders. If the price clears the 0.7947 resistance zone decisively, call options or long futures positions could become appealing. Until then, sellers, who have dominated for months, still hold the upper hand.

Market Dynamics

The current market situation adds some complexity to the technical analysis. In May, Swiss inflation remained low at 1.4%, giving the Swiss National Bank room for another interest rate cut after its unexpected reduction in March. This differing approach compared to a still-cautious U.S. Federal Reserve could help buyers push past the moving average targets. On the other side, recent U.S. economic data has been mixed, with consumer sentiment dropping unexpectedly to a seven-month low in June. This creates a tug-of-war, making a sustained breakout above the 0.7986 level challenging. Traders should expect volatility around these important technical levels as the market processes conflicting economic signals. It’s important to note that we are trading at multi-year extremes, levels not seen since 2011-2012. Historically, such lows were driven by major central bank interventions during the European debt crisis. This backdrop suggests that a lasting reversal will require significant buying strength to break the established downtrend. Thus, our strategy for the upcoming weeks involves closely monitoring the identified resistance levels. If buyers fail to move past these points, it may be time to consider buying put options or taking short positions, targeting a retest of the 0.79197 support. The market’s response at these critical points will determine our next steps. Create your live VT Markets account and start trading now.

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