EUR/CHF Rebounds, but Still Below the Lower End of a Range
|EUR/CHF has been in a recovery mode since Thursday, when it hit support near 1.1057. The day before, the rate tumbled and broke below 1.1137, the lower end of a range that contained the price action since May 22nd, while the aftermath recovery, at least up until now, remains limited below that boundary. Thus, as long as EUR/CHF is trading below 1.1137, we will hold a bearish stance.
If the bears are strong enough to take charge from current levels, then we may see them driving the battle back down for another test near 1.1057. Another break, below 1.1057, could encourage more sellers to jump into the action and perhaps set the stage for our next support area, at around 1.0985, defined by the lows of July 13th and 19th, 2017.
Looking at our short-term momentum indicators, we see that the RSI turned down from slightly below 50, while the MACD, although above its trigger line, lies within its negative territory and shows signs that it could start turning south as well. These indicators suggest that the current recovery may be in its last stages and that the bears may be ready to take the reins again soon.
On the upside, a decent move back above 1.1175 could confirm the rate’s return back within the aforementioned sideways range, and thereby turn the near-term outlook back to flat. The recovery could continue with the range, with the rate initially testing the 1.1213 area, the break of which may allow extensions towards the upper bound of the range, at around 1.1265.
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