EUR/CHF Technical Outlook and Review

Broadening Pattern Visible on the Daily Timeframe

Against the Swiss franc, Europe’s shared currency wrapped up another week unchanged despite ranging between a high of CHF0.9685 and CHF0.9615. Now, if you look at the daily timeframe for the EUR/CHF cross, resistance has been in play at CHF0.9675 since mid-November, a level not only boasting strong historical significance but one that is accompanied by a moderate Fibonacci cluster at CHF0.9678 and the 200-day simple moving average (SMA) nearby at CHF0.9705. Unquestionably, this is an area of resistance that boasts strong confluence.

Chart pattern enthusiasts may also acknowledge the broadening pattern forming at the resistance base between CHF0.9681 and CHF0.9619; these are notoriously difficult patterns to trade, but should a symmetrical triangle begin to emerge at current price (sometimes referred to as a coil), a diamond top pattern could develop (combining the broadening pattern and coil), considered by many to be a high-probability reversal pattern. And considering we’re trading at strong daily resistance, with a bearish trend evident since the beginning of this year, this might spark a dominant bearish theme on the daily chart.

Out of the monthly timeframe, the trend has been to the downside since early 2018, housed within a descending channel drawn from CHF1.2005 and CHF1.0508. You will also see that since July of this year, buyers and sellers have been warring for position at the channel support and early positive divergence is being seen from the Relative Strength Index (RSI). However, also in the mix and more supports a bearish picture, technicians may recognise the descending triangle between CHF1.0042 and CHF0.9403, which is typically viewed as a bearish continuation pattern.

From the H1 timeframe, the week finished around familiar resistance at CHF0.9649, which happens to be joined by an ascending support-turned-resistance line taken from the low of CHF0.9597 and a 50.0% retracement ratio coming in from CHF0.9650. Below current price, limited support is visible until CHF0.9620, while to the upside beyond current resistance, the scope to target resistance at CHF0.9679 is evident.

Price Direction?

While H1 resistance at CHF0.9649 held into the close and is bolstered by an ascending support-turned-resistance line and a 50.0% retracement ratio (with limited H1 support seen until CHF0.9620), a break higher to retest resistance at CHF0.9679 is still on the table (shares a close relationship with daily resistance at CHF0.9675). This is primarily due to the lack of willingness from short-term sellers to form any meaningful low from current H1 resistance.

Therefore, some could view an H1 close beyond the current H1 resistance as a short-term bullish event this week, targeting H1 resistance at CHF0.9679.

Charts: TradingView

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