EURCHF: Off its peak but still positive for the week

EURCHF, H4 and Daily/Weekly

EURCHF has lifted back toward 1.1300 amid a broader Euro bid, though the cross remains well off yesterday’s 2 -week high at 1.1342 yesterday.

The Franc has recently been intermittently in demand as a safe haven currency (particularly when the Turkish Lira and/or Italian assets have been under pressure), although a long Franc position has been made an expensive carry by the SNB given the -0.75% deposit rate, and the currency has been prone to quick unwinding of long positions. Strong Swiss GDP data for Q2 last week questioned the need for the SNB’s aggressively-loose monetary policy, though with inflation remaining benign the central bank may not be ready to signal a policy shift given the risk for further episodes of Franc-supporting risk aversion stemming from emerging markets and/or escalation in trade protectionism. The SNB will be looking to time its tightening with ECB tightening.

The EURCHF has traded bearishly since May, remaining though in a positive path since the 2015 drift. This week the pair gives some positive vibes for the near future, as it rebounded on Monday from the key Support area, at year’s low and 61.8% Fibonacci retracement level set from 2017, at 1.1180-1.1150. For the past 2 days is holding close to 2-week peak, retesting the 20-day SMA and the 50.0% Fibonacci level, at 1.1330 and 1.1316 respectively.

Meanwhile, by observing the performance of the pair since May, we have also notice that it seems to form the Elliot Wave theory, as it is presenting so far 5 waves move in the downtrend. Theoretically, such move is followed by 3 corrective waves (a 5-3 move). Technically-wise, all the above along with a closing above the 1.1330 Resistance level, could signal the possibility of 3 corrective moves to the upside. Daily momentum indicators have been slightly improved the last month, by making higher lows, however they are still moving below the neutral zone, something that suggest that outlook remains in negative overall. RSI is at 41 while MACD lines and signal line have been flattened into the negative territory, suggesting that pair might enter a consolidation mode.

Daily/ Weekly: A close above the 20-day SMA and the 2-week peak, at 1.1330 – 1.1343, may meet resistance around the 1.1465-1.1470 Resistance area, this being the latest up fractal in the daily chart and the confluence of 50-day SMA and upper Bollinger Bands pattern. In case of further upside extensions, the price could re-challenge the 1.1635 level, taken from 200-day SMA.

In the case of a turn back at the bottom of 2018, the break of the 61.8% Fib. level could implies to “free fall” for EURCHF as the next Support comes at  200-day SMA and the round 1.1000 level.

Intraday (H4):  The pair moved downwards after London open and it is currently retesting the confluence of 20- and 50-period SMA and 50% Fib level since Monday’s rally. Support holds at this confluence, hence a closing of the latest H4 candles below 1.1260, could then target the area around the 1.1200 hurdle.