Technical Analysis – EURCHF breaks rectangle but will the move last?
July 17, 2023 12:27 pm
EURCHF is edging lower today, experiencing the second bearish breakout of the rectangle that has been defining the price action since October 13, 2022. It is currently trading slightly above the July 13, 2023 low of 0.9607, its lowest print since September 30, 2022, and battling with the 0.9650-0.9665 range that eluded the bears during the May 30 drop.
In the meantime, theAverage Directional Movement Index (ADX) jumped above its 25-threshold, confirming the presence of a bearish trend in the market. More interestingly, the stochastic oscillator is hovering at its oversold area. It can stay there for a while before signaling the start of another upleg.
Should the bears decide to push EURCHF even lower, they first have to break the key 0.9650-0.9665 range. This is defined by the January 15, 2015 low and the 23.6% Fibonacci retracement of the June 9, 2022 – September 26, 2022 downtrend respectively. If successful, the door would then open for a more sizeable move lower towards the 0.9403 area.
On the flip side, the bulls are desperate for a return inside the rectangle. They first have to push the pair above the November 14, 2022 low at 0.9706 and then test the resistance set by the 50-day simple moving average (SMA) at 0.9737. Even higher, the key June 9, 2022 downward sloping trendline and the much talked-about 0.9802-0.9843 area would really test the bulls’ determination.
To sum up, another bearish breakout in EURCHF is underway but a strong move below the 0.9650 area is needed to defy the false breakout expectations.
EURCHF is edging lower today, experiencing the second bearish breakout of the rectangle that has been defining the price action since October 13, 2022. It is currently trading slightly above the July 13, 2023 low of 0.9607, its lowest print since September 30, 2022, and battling with the 0.9650-0.9665 range that eluded the bears during the May 30 drop.
In the meantime, the Average Directional Movement Index (ADX) jumped above its 25-threshold, confirming the presence of a bearish trend in the market. More interestingly, the stochastic oscillator is hovering at its oversold area. It can stay there for a while before signaling the start of another upleg.
Should the bears decide to push EURCHF even lower, they first have to break the key 0.9650-0.9665 range. This is defined by the January 15, 2015 low and the 23.6% Fibonacci retracement of the June 9, 2022 – September 26, 2022 downtrend respectively. If successful, the door would then open for a more sizeable move lower towards the 0.9403 area.
On the flip side, the bulls are desperate for a return inside the rectangle. They first have to push the pair above the November 14, 2022 low at 0.9706 and then test the resistance set by the 50-day simple moving average (SMA) at 0.9737. Even higher, the key June 9, 2022 downward sloping trendline and the much talked-about 0.9802-0.9843 area would really test the bulls’ determination.
To sum up, another bearish breakout in EURCHF is underway but a strong move below the 0.9650 area is needed to defy the false breakout expectations.
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