EUR/CHF Tumbles Below the 1.1373 Support
|EUR/CHF traded lower during the European morning Thursday, breaking below the key support zone of 1.1373, marked by the low of January 31st, that way confirming a forthcoming lower low on the 4-hour chart. Although the rate continues to trade above the tentative upside support line drawn from the low of January 2nd, today’s slide suggests that there is room for some further declines, perhaps towards that line.
We believe that the dip below 1.1373 may have initially opened the way for the 1.1345 key support zone, which proved to be a strong resistance from the beginning of December until January 29th, when it was broken to the upside. We could see a rebound from that zone, but if the rate fails to move back above the 1.1373 barrier, we see a decent chance for another slide and another test near 1.1345. It that area fails to support the pair this time, then we may experience downside extensions towards the aforementioned upside line, or the 1.1310 area, defined by the low of January 28th.
Shifting attention to our short-term oscillators, we see that the RSI lies below 50 and looks to be heading towards 30, while the MACD lies below both its zero and trigger lines, pointing down as well. Both indicators detect negative momentum and support the notion for this exchange rate to continue correcting lower for a while more.
On the upside, we would like to see a clear break above 1.1400 before we start examining whether the setback is over earlier, and whether the bulls are back in the driver’s seat. Such a break could initially aim for the 1.1428 zone, the break of which could carry extensions towards the high of February 5th, which fell just shy of the 1.1445 hurdle.
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