Euro area data weakened while Swiss indicators improved. Will the EURCHF decline continue?
Euro-zone economic data were weak after flash reading of GDP indicated economic growth slowed in Q2 in single currency area: contraction in manufacturing sector deepened in July, and services sector expansion slowed as Markit’s manufacturing PMI declined to 46.5 from 47.6 and services PMI slipped to 53.2 from 53.6. For the same month KOF Leading Indicators for Switzerland rose to 97.1 from an upwardly revised 93.8 in June. Indicator improved in manufacturing, services and construction sectors. Weaker eurozone data and improving Swiss data are bearish for EURCHF.
On the daily timeframe EURCHF: D1 is retracing lower after hitting 10-month high in the end of April, and is below the 50-day moving average MA(50) which is falling. These are bearish developments.
-
The Parabolic indicator has formed a sell signal.
-
The Donchian channel indicates no trend yet: it is flat.
-
The MACD indicator is below the signal line with the gap widening. This is a bearish signal.
-
The Stochastic oscillator is rising but has not reached the overbought zone.
We believe the bearish momentum will continue after the price breaches below the lower Donchian boundary at 1.0862. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upper Donchian channel at 1.0957. After placing the pending order the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop-loss level (1.0957) without reaching the order (1.0862) we recommend cancelling the order: the market sustains internal changes which were not taken into account.
Technical Analysis Summary
Order | Sell |
Sell Stop | Below 1.0862 |
Stop loss | Above 1.0957 |
Want to get more free analytics? Open Demo Account now to get daily news and analytical materials.
This overview has an informative character and is not financial advice or a recommendation. IFCMarkets. Corp. under any circumstances is not liable for any action taken by someone else after reading this article.
Recommended Content
Editors’ Picks
AUD/USD remains under pressure above 0.6400
AUD/USD managed to regain some composure and rebounded markedly from Tuesday’s YTD lows in the sub-0.6400 region ahead of the release of the Australian labour market report on Thursday.
EUR/USD faces decent contention around 1.0600
The knee-jerk in the Greenback reignited some buying interest in the risk complex and pushed EUR/USD to three-day highs near 1.0680, rapidly leaving behind the recent yearly low around 1.0600.
Gold eases despite risk-off mood
Gold trades in a relatively tight range near $2,390 in the second half of the day on Wednesday. In the absence of high-tier data releases, investors keep a close eye on headlines surrounding the Iran-Israel conflict.
Ethereum trades around the $3,000 support following a surge in validator queue
Ethereum (ETH) continued a sideways movement on Wednesday as investors seemed to be waiting for an upward or downward price catalyst. Despite the price stagnancy, the ETH validator queue - possibly fueled by the DeFi restaking boom - rose sharply.
Markets stabilize after Powell rules out rate hike, but the signs don’t look good
Markets are volatile right now; however, a relative calm has descended on the market and US. US stocks are down a touch, but the Vix is lower, US Treasury yields are lower, and the dollar is mostly lower vs. its G10 FX counterparts.