Technical Analysis – EURCHF confined in a narrow range; still negative in medium-term

Marios Hadjikyriacos, XM Investment Research Desk

EURCHF remains in a medium-term downtrend, with the price structure on the daily chart consisting of lower peaks and lower troughs below both the 50- and 200-day simple moving averages (SMAs). That said, the near-term picture is neutral, with the pair trading within a narrow range between 1.1020 and 1.0810 since early August.

Momentum oscillators paint a relatively negative picture, suggesting that the lower bound of this range may be tested soon. The RSI is already below 50 and pointing down, while the MACD just fell below zero and is also beneath its red trigger line.

If the bears remain in charge and manage to pierce below 1.0810, that would bring the price to a new 2½-year low and reaffirm that the broader downtrend is back in play. In this case, the next target may be the 1.0630 territory, defined by the 2017 lows.

On the flipside, if the bulls take the wheel, the first obstacle may be the upper bound of the sideways range at 1.1020. An upside break could turn the short-term bias to positive, opening the way for a test of 1.1550. Another move above that zone would also turn the broader outlook to neutral.

Summarizing, the pair remains in a bigger downtrend, but in the short-term, a break either above 1.1020 or below 1.0810 could set the direction.