After gaining strongly for the past couple of days, the dollar’s rally seems to have fizzled out a bit. And look where it has stalled on USD/CHF’s daily time frame! Is it time to short the Greenback?
As you can see on the chart below, USD/CHF has just showed a doji on the daily time frame. For forex newbies out there, you should know that dojis signal indecision and are usually harbingers of reversals (though not always!).
What made the chart stand out for me was that the doji popped up right around the range resistance near parity AND the top weekly ATR. On top of that, stochastic is also chillin’ like ice cream fillin’ on the overbought area. Talk about the stars lining up!
A bit of dollar weakness isn’t a long shot these days especially after the dollar has enjoyed sharp and consistent rallies since Trump won as President. Janet Yellen is also scheduled to give a testimony today, and market players are expecting her to share opinions on a range of issues including the Fed’s rate hike schedule during the Trump administration. With the way the dollar has gained in the past few days, I wouldn’t be surprised if the bears come out and play today.
I’m currently on a wait and see mode until I hear from Janet Yellen. If she signals that Trump’s plans won’t affect the Fed’s rate hike schedule, then we might see a bit of profit-taking. But if she hints at possibly raising their rates more often than they initially planned, then I might consider this setup as a possible breakout play and position my buy orders.
What do you think? Will parity hold for USD/CHF this week?