USDCHF breaking clean above 0.8280, are we really heading straight for 0.8400?

[Robert Chen]

Hey guys, was charting USDCHF this morning and noticed that solid push right through the 0.8280 resistance level. That area capped the September impulse and intersects right with the daily ascending channel from August, so seeing price punch through it with decent volume definitely caught my attention.

Ngl, looking at the order flow, it feels like momentum traders are jumping in heavy, and the wave structure seems to point toward 0.8400 next. But I'm a bit hesitant to fomo in up here. I'm wondering if we get a swift liquidity sweep back to retest 0.8280 as new support, or if the dollar strength just carries this straight into the next major resistance block without looking back.

How are you guys playing this breakout, waiting for the retest or chasing the continuation move up to 0.8400?

 

[Zakami Ng]

Man I wouldn't count on 0.8400 just yet, especially looking at the daily chart. RSI is showing some pretty nasty bearish divergence right as it tries to punch through that 0.8280 level. Plus if you check the MACD, the histogram is starting to lose steam even with this green candle. Might just be a fakeout to grab liquidity before heading back down.

 

[EthanCole]

RSI is showing some pretty nasty bearish divergence right as it tries to punch through that 0.8280 level.

Spot on. I’ve been looking at the same thing on the Daily and it's making me hesitate. Chasing a breakout right into divergence is usually a recipe for disaster if you're trying to swing this.

I’m sitting on my hands for now. 0.8400 is a nice target but I’d rather wait for a retest of 0.8280 as support before even thinking about clicking buy. No point overtrading a messy move.

 

[LucasBennet]

I wouldn't touch this long here either. @Zakami Ng hit the nail on the head with that divergence, it's screaming trap to me. If NFP drops later and we get any surprise in the numbers, this breakout is getting faded hard. I'm with @EthanCole on this one, waiting for the retest is the only way to play it safe without getting your head ripped off by a stop hunt.