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US Dollar is Capped by the 21 Day SMA

US dollar

Looking at the US dollar (USD) on the above daily USD/CHF MT 4 price action chart, the short-term twenty one (21) day simple moving average (SMA) continues to cap gains in this benchmark Forex market. 

Today is the last trade day and last day of the year. There is nothing on the economic calendar to spur price action with the US dollar or Swiss franc. The greenback also remains on the defensive despite political uncertainty and wrangling in Congress over $2,000 payments to households.

Forex traders will watch coronavirus news as cases continue to spike higher across the United States and Europe. Coronavirus vaccine news and developments are also being watched closely.

Daily US Dollar Technical Analysis (USD/CHF)

Looking at price action on the above USD/CHF chart, the almighty US dollar is on the defensive against the Swiss franc. Forex traders look to be challenging the downside barrier in place at 0.8825. The technical indicators like the MACD histogram and the 14 day relative price index are stable but not supportive of any bullish action for the greenback.

The RSI is below the mid-line a fifty (50) and out of the oversold area indicating neutral price action as is the MACD histogram.

With that said, a daily close above the 20 day SMA at 0.8880 will open the door to challenge the next upside barrier at 0.8990. The restrictive Kijun-sen line is also at this level as is the fifty day simple moving average. The next upside barrier is at a congestion area at 0.9085 to 0.9140.

On the downside, a daily close below the technical support of 0.8825 opens the door to challenge the support at 0.8760. Bottom line, as we enter 2021, the greenback remains on the broad defensive and the USD/CHF seems to be setting up a floor below the short-term twenty day simple moving average.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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