Looking at the monthly timeframe, it is evident that the trend for EUR/CHF is firmly to the downside. A significant technical observation on this scale is the completion of a bearish chart pattern. This breakout lower beneath the lower boundary of a descending triangle formation, which extended from the high of CHF1.0042 and a low of CHF0.9435, refreshed all-time lows of CHF0.9254. The fact that the price recently retested the underside of the breached pattern level, in conjunction with the visible downtrend in this market, suggests that sellers are favored in the long term. This market may see technical traders targeting sell-on rally scenarios.
Price action on the daily timeframe recently displayed a one-sided pullback from the low of CHF0.9254, which formed within a clear-cut downtrend. However, this pullback encountered technical resistance comprising of a moderate Fibonacci cluster around CHF0.9482, the 50-day Simple Moving Average (SMA) at CHF0.9466, and the Relative Strength Index (RSI) indicating hidden negative divergence. Taking into account the bigger picture and the longer-term downtrend, short-term sellers are likely to fade any rallies.
On the H1 scale, buyers and sellers are confronting each other at the underside of a recently breached trendline support, taken from the low of CHF0.9279. Additionally, the CHF0.94 handle beckons below. If sellers overpower buying interest, as suggested by the higher timeframes, and the cross breaks below CHF0.94, it could pave the way for a bearish scenario. The initial downside target in this case would be the H1 support between CHF0.9366 and CHF0.9375. Therefore, based on technical analysis, sellers should maintain control south of H1 trendline support and eventually aim to deplete any bids around CHF0.94, as they set their sights on H1 support between CHF0.9366 and CHF0.9375.
It is crucial to acknowledge that the information presented in this article is intended for general advice only. It does not take into account individual investment objectives, financial situations, or specific needs. While every effort has been made to ensure the accuracy of the information as of the date of publication, no warranty or representation is given. Examples provided are merely for illustrative purposes. FP Markets and its employees disclaim any liability for loss or damage arising from or in connection with the information provided herein, including negligence.
Before making any trading decisions, it is essential to review the features of FP Markets products, including applicable fees and charges, as outlined in the Product Disclosure Statements available on the FP Markets website. Trading derivatives involves risk, and losses can exceed initial payments. It is advisable to seek independent advice before engaging in trading activities.
The analysis of EUR/CHF suggests a bearish scenario unfolding based on multiple timeframes. The downtrend on the monthly scale, the pullback within a downtrend on the daily scale, and the battle at trendline support on the H1 scale all point towards sellers having the upper hand. However, it is crucial to consider individual circumstances and seek professional advice before making any trading decisions.
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