Technical Analysis – EURCHF creates spikes in sideways channel

Melina Deltas, XM Investment Research Desk

EURCHF created an aggressive upside spike on Monday, after the bounce off the 40-simple moving average (SMA) in the daily timeframe and on the 23.6% Fibonacci retracement level of the downward movement from 1.1710 to 1.1180, around 1.1305. Currently, the pair is consolidating within a sideways channel with upper boundary the 1.1470 level and lower boundary the 1.1180 support.

Technically, the RSI indicator is sloping upwards in the positive zone, while the stochastic oscillator is ready to post a bullish crossover within the %K and %D lines.

Upsides moves in the range are likely to find resistance at the 38.2% Fibonacci of 1.1380. There is an important resistance zone between the 50.0% Fibonacci of 1.1445 and the 1.1470 hurdle which is the next area for traders to turn their attention to in the near term. A jump above this level could challenge the upper boundary of 1.1500 and the 61.8% Fibonacci of 1.1510.

If 1.1305 support fails, then the focus would shift to the downside towards 1.1240, which if breached, would increase downside pressure and hit the 1.1180 strong support level.

Overall, if the pair penetrates the consolidation area to the downside, it would confirm the long-term bearish structure, while a jump above 61.8% Fibonacci would switch the outlook to bullish.