EURCHF bouncing from the neckline
|Today, we do have an interesting occasion on the EURCHF, which is having a very clean, technical, selling setup. We are only missing the proper bearish reaction here. Actually, the thing that we are missing here is a weaker Euro.
OK, let's start from the very beginning: The price is in a down trend and in the last week, broke the lower line of the wedge, which was a trend continuation pattern. What is more, at the end of the wedge, EURCHF created the head and shoulders pattern (grey). We already got a breakout of the neckline (yellow), which is triggering us a sell signal. This week starts with a test of the neckline as a closest resistance. Actually a second test. First one resulted with a bounce, the second one..not so much. Currently, the price is advancing higher and is going deep inside the area that could be considered as a great place to sell. Only the bearish price action on the yellow area will be a legitimate sign to go short.
European session ends with the price below the yellow area but the reversal is not encouraging yet. Daily chart is a doji and this pattern alone is too weak to trigger a sell signal. Traders can think about opening a sell position, once the price will make new weekly lows. That could be a start of a bigger downswing. Negative scenario will be denied once the rice will climb back above the yellow area.
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