By: Mike Kulej
Since early September, the EUR-CHF had been in a substantial rally. It took this pair from the all time low of 1.2765 to a high 1.3835, which gave an appearance of a major reversal. However, the price failed to reach the key resistance of 1.3925.
This level, the last high before the bottom, must be broken in order to confirm a long term trend change. Instead, the EUR-CHF sold off sharply over last week, breaking couple of support levels in the process.
First, the up trendline gave way, followed by the 100 SMA. Currently, the price is nearing yet another support level, provided by a low of 1.3262. Chances are that we may see a reaction there. The MACD is very close to a zero line and the Stochastic Indicator is extremely oversold on short term bases.
When put together, these factors increase the probability of the EUR-CHF finding a support soon, at least for a while. If the market breaks through the 1.3262 level on closing basis using daily chart, the outlook for the EUR-CHF will worsen considerably, pushing it down to the next support of 1.3070, and perhaps even back to the all time low. For now, however, focus goes to 1.3262 and a question – will it hold?