- EURCHF continues to trade in a tight range
- The medium-term bearish trend is still valid
- Momentum indicators prepare for the next key move
EURCHF is trading slightly higher today, a tad below the busy 0.9403-0.9423 area. EURCHF has actually been range-trading over the past few sessions, but it has managed the break below the developing contracting triangle. However, the move lower has been unimpressive, raising the possibility for a false breakout, which usually results in a strong move on the opposite direction.
The current reduced volatility is reflected in the momentum indicators, which remain directionless. In more detail, the RSI continues to aimlessly hover around its midpoint, without any appetite for a more dynamic move. Similarly, the Average Directional Movement Index (ADX) is stuck below its midpoint and thus reveals a trendless market in EURCHF. More importantly, the stochastic oscillator is hovering around its moving average (MA). Its next decisive move could be a strong signal for the direction of EURCHF, particularly if it occurs on the downside and in line with the long-term March 27, 2024 trendline.
If the bulls remain hungry, they will try to push EURCHF above the busy 0.9403-0.9423 area, which is populated by the September 26, 2022 low and the 50-day simple moving average (SMA), and hence back inside the triangle pattern. They could then test the resistance set by the upper trendline of the contracting triangle, the key May 27, 2024 downward trendline and the 23.6% Fibonacci retracement of the January 13, 2023 – December 29, 2023 downtrend. Even higher, the next key resistance level is probably the 100-day SMA at 0.9511.
On the flip side, the bears are trying to record a forceful move lower that spans over the next few sessions, validating the bearish breakout from the triangle pattern. If successful, the bears could have the chance to target the December 29, 2023 low at 0.9253, with the 2024 low then being just a tad lower at 0.9209.
To sum up, EURCHF has broken below the developing triangle pattern. If a strong downleg does not take place soon, there is a strong possibility of the bulls retaking market control.
Source by: XM Global