EUR/CHF edged north yesterday, breaking above the key resistance (now turned into support) zone of 1.1450, defined by the peaks of the 27th and 28th of August, as well as by the high of the 5th of October. That said, the rate hit resistance slightly below the psychological 1.1500 level and then, it retreated somewhat. The pair continues to trade above the upside line drawn from the low of the 21st of September, and also above all three of our moving averages. Therefore, we would consider the near-term outlook to be positive.
If the bulls are strong enough to take charge again soon and push the rate above the 1.1500 obstacle, then we may see them aiming for our next hurdle of 1.1555, marked by the peak of the 8th of August. Another break above that level could set the stage for extensions towards the 1.1605 zone, which was proved a good resistance from the 27th of July until the 1st of August.
Taking at look at our short-term oscillators though, we see that the RSI topped marginally above 70 and moved back below that line, while the MACD, although above both its zero and trigger lines, shows signs that it could start topping as well. These indicators suggest slowing upside momentum and make us cautious that further retreat may be on the cards before the next positive leg, perhaps for the rate to test the 1.1450 zone as a support this time.
Now, in case the 1.1450 zone does not prevent the rate from dropping further, we would still see a positive picture as the pair could rebound from the aforementioned upside line. A clear dip below that line is the move that would make us abandon the bullish case and take the sidelines.
We would start examining the likelihood of a negative reversal if the rate drops below 1.1370. Such a move would confirm a lower low on the 4-hour chart and could initially open the path towards the 1.1310 area, defined by the low of the 2nd of October. Another break below 1.1310 could extend the slide towards 1.1280.
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