Technical Bias: Bullish
Key Takeaways
“¢ Euro broke an important resistance zone to trade higher against the Swiss franc.
“¢ Swiss franc remained one of the biggest losers yesterday post all major risk events.
“¢ EURCHF support seen at 1.2150 and resistance ahead at 1.2185.
The Euro struggled to hold ground against the Swiss franc earlier during this week, but yesterday the EURCHF pair finally managed to gain bids and traded higher above a critical resistance area.
Significant Break?
There was an important descending channel formed on the 4 hour timeframe for the EURCHF pair, which was holding the upside in the pair. The channel resistance trend line was coinciding with the 50 simple moving average (4H). The pair after forming a base around the 1.2130 support level traded higher and broke the channel resistance trend line. However, it found resistance just around the 100 SMA (4H). Currently, the pair is flirting with the 23.6% Fibonacci retracement level of the last drop from the 1.2237 high to 1.2131 low. It has already re-tested the broken channel trend line once, which acted as a support. Moving ahead, the chance of a re-test of 100 SMA (4H) is very likely. If somehow the pair manages to break the same, then it might surge towards the 50% fib level at 1.2185, which also coincides with the 200 SMA (4H).
Alternatively, if the pair trades lower again and fails to hold the 50 SMA (4H), then a drop back towards the recent low of 1.2131 is possible in the short term. One important point to note here is that there was a crucial RSI trend line on the 4 hour timeframe, which was breached yesterday. This can be considered as a positive sign, as it is now above the 50 level.
Overall, as long as the pair is trading above the 1.2150 support level more gains are likely in the near term.
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