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Technical Analysis – EURCHF bulls could finally see light at the end of the tunnel
August 21, 2023 10:28 amVideo
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EURCHF is edging higher today as the bulls are trying to put a stop to the continued downside pressure. The bears failed to record a lower low, below the July 27, 2023 low of 0.9521, and instead a bullish structure of double bottoms appears to have formed. A move above the 0.9648 neckline is needed for this pattern to become valid.
In the meantime, the momentum indicators appear mostly directionless at this stage. More specifically, the Average Directional Movement Index (ADX) has sunk below its 25-threshold, and it is now pointing to a range-trading market. More interestingly, the RSI remains a tad below its 50-midpoint and reveals the presence of a bearish tendency. Similarly, the stochastic oscillator is hovering below to its midpoint as it prepares to test the resistance set by its moving average. The outcome of this battle could decide the next EURCHF leg.
Should the bulls feel inspired by the developing bullish pattern, they could try to stage a move above the June 22, 2023 downward sloping trendline. They might then reclaim the key 0.9650-0.9669 range that is defined by the January 15, 2015 low, the 50-day simple moving average (SMA) and the 23.6% Fibonacci retracement of the June 9, 2022 – September 26, 2022 downtrend respectively. Even higher, the 0.9706-0.9724 area, populated by the November 14, 2022 low and the 100-day SMA, could prove tougher to overcome.
On the flip side, the bears look determined to push EURCHF even lower. The first obstacle appears to be the August 23, 2022 low at 0.9552 and the recent 2023 low at 0.9521. Breaking these levels would then mean that the bears could then have a go at leading EURCHF towards the 0.9403 area, and the chance to record a new all-time low.
To sum up, EURCHF bears remain in control of the market but the momentum indicators along with a developing bullish structure could signal the start of a sizeable rebound.
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