Technical Bias: Neutral
Key Takeaways
- Euro sellers continue to put pressure on the SNB, as the EURCHF pair dropped towards the peg level.
- 1.2075 hold the key for a move higher in the near term.
- EURCHF support seen at 1.2040 and resistance ahead at 1.2075.
The Swiss franc continued to outperform the Euro as the EURCHF pair traded below the 1.2060 level. However, there is a little chance of one more low in the short term if the pair manages to break 1.2075.
Technical Analysis
There is a small chance that the EURCHF pair is likely forming an inverse head and shoulders pattern on the 4 hour timeframe. There are two bearish trend line plotted, which might act as a catalyst for the pair in the near term. The most important point to note is that the second bearish trend line is coinciding with an important confluence area of 100 simple moving average (SMA) – 4H and 23.6% Fibonacci retracement level of the last drop from the 1.2176 high to 1.2044 low. Currently, the pair is trading around the first bearish trend line, and if it manages to settle above the mentioned confluence area, then it would open the doors for a short-term reversal in the pair. The 4H is trying to settle above the 50 mark, which is a positive sign in the short term. On the upside, the 50% fib retracement level might be considered as a swing area for the pair around the 1.2110 level.
If the EURCHF pair fails to hold above the 1.2054 level, then a move lower might call for a retest of the previous low. Any further losses should be limited as it might increase the chances of the SNB intervention.
Overall, one can attempt a buy trade if the pair successfully breaks and closes above the 1.2075 level.
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