Technical Analysis – EURCHF stalls above 200-day SMA as negative tensions grow

Anthony Charalambous, XM Investment Research Desk

EURCHF remains confined between 1.0837 and 1.0733 as it consolidates above the 200-day simple moving average (SMA), something also reflected in the flattened Ichimoku lines and cloud. The pair’s recent weakening in this section is further mirrored in the short-term oscillators.

The MACD, some distance in the positive region, has dipped below its red signal line, while the RSI is decreasing towards the 50 threshold. Moreover, the stochastic oscillator has turned negative with weak momentum. Nevertheless, the positive bearing of the rising 50- and 100-day SMAs and the near completion of a bullish crossover of the 200-day SMA by the 50-day one suggest that advances may follow the recent losses in the pair.

If selling interest continues, initial downside limitations may commence at the 1.0733 key low. Slipping past this level, a vital support region from the blue Kijun-sen line until the 1.0700 barrier may terminate efforts to deteriorate further. The zone includes the 38.2% Fibonacci retracement of the down leg from 1.1058 to 1.0504, at 1.0715, the Ichimoku cloud and the forthcoming bullish crossover within the SMAs. Diving beneath, the 1.0649 obstacle and the 23.6% Fibo of 1.0635 at the 100-day SMA may prevent the pair from reaching the 1.0598 trough.

Should buyers manage to drive the price above the 50.0% Fibo of 1.0781, hardened resistance could be met at the 1.0837 mark. Surpassing these critical highs and the 61.8% Fibo of 1.0847 slightly above, the pair may shoot for the 1.0914 peak. If the price gains additional ground, it could then encounter the 76.4% Fibo of 1.0928 and the 1.0967 border.

Summarizing, above the 200-day SMA a short-term neutral-to-bullish bias exists, with a break below 1.0700 or above 1.0837 needed to clear a direction.