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Technical Update - EURCHF bottom and reversal pattern indicates rebound to around parity

Forex 2 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

EURCHF has broken bullish out of its falling wedge like pattern i.e. broken its falling trendline. After a breakout of a falling wedge the price should at least be able to reach the highest peak in the wedge in this case around 0.9945. That is roughly around the 0.382 Fibonacci retracement level of the June to August sell off.
RSI has been showing divergence for some time indicating the selling pressure was weakening. It is still below 60 i.e. show negative sentiment. A close above 60 will support further upside in EURCHF.
A close below 0.9580 will demolish the bottom and reversal scenario

EURCHF d 31aug
Source: Saxo Group

On the weekly chart EURCHF has formed a Doji Evening bottom and reversal pattern – unless the price collapses before the Friday close resulting in a negative end to the week. The Doji Evening indicates a reversal which could take EURCHF to the resistance at around 0.72. A close above and parity is to be tested with a possible spike up to 10.01.

The bottom and reversal scenario is supported by divergence on RSI.

EURCHF w 31aug
Source: Saxo Group

On monthly chart EURCHF has found support at the 0.618 Fibo retracement at 0.9657. The Shoulder-Head-Shoulder pattern described in previous analysis will still be intact if we get a bounce to around 1.00-1.01.

 

EURCHF m 31aug
Source: Saxo Group

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