Technical Analysis - EURCHF edges higher but bias unclear

EURCHF has been gradually edging higher in the past few sessions as it attempts to find a clear direction ahead of an action-packed period. A series of higher highs and higher lows since the multi-decade low of September 26 of 0.9403 have placed the pair in a short-term bullish trend but the near-term bias remains unclear.

The September 29 upward sloping trendline has been acting as a trailing support amidst an environment of lower volatility. A cross check of the indicators confirms this market uncertainty. The Average Directional Movement Index (ADX) is showing a lack of trend, as it is clearly below 25, while the RSI is trading sideways, but above the 50-midpoint. If we also put in the mix the tightening Bollinger bands, then the market appears to be gearing up for the next move.

Should the bulls decide to push EURCHF higher, they will be faced with the 0.9958-80 area. The 50% Fibonacci retracement level of the June 9 – September 26 downtrend of 0.9958, the March 7 low and the 200-day simple moving average (SMA) respectively occupy this range. Looking higher, the 61.8% Fibonacci at 1.0089 should be an obvious target.

From the perspective of the bears, the 38.2% Fibonacci of 0.9827 and the 50-day SMA should be the initial targets, before they become more ambitious and place their eyes on the 100-day SMA at 0.9746. Lower, the 23.6% Fibonacci of 0.9665 could be the next support level.

To sum up, EURCHF is trying to find its near-term direction. The very gradual move higher is not confirmed by the momentum indicators as the market appears to be in waiting mode.


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