Technical Analysis – EURCHF extends gains but cloud top may block further advances
September 26, 2023 2:27 pm
EURCHF jumps 1% in a week after surprise SNB pause
Short-term bias is still bullish
But obstacles lie ahead
EURCHF has leapt higher over the past week, climbing well above its 50-day simple moving average (MA) and entering the Ichimoku cloud. The momentum indicators are maintaining the short-term positive bias as the RSI is edging towards the 70 overbought level, while the MACD is ascending above zero and its red signal line.
However, although the bulls remain firmly in control, the road ahead may become more challenging. Prices are currently trading around the 61.8% Fibonacci retracement of the September 2022 – January 2023 uptrend at 0.9668 after easing slightly from yesterday’s peak of 0.9684 when they briefly bumped into the descending trendline. Adding to the strong resistance in this area is the top of the Ichimoku cloud at 0.9681.
Pushing higher will likely require some force, but if successful, the path is clear until the 50% Fibonacci of 0.9750, after which attention would turn to the 200-day SMA at 0.9775. A break above the 200-day SMA would help shift the bearish medium-term trend to a bullish one.
On the other hand, if the resistance around the cloud top continues to cap gains, EURCHF could revert lower. There may be some support in the 0.9600 region that is the current base of the Ichimoku cloud and also where the Tenkan- and Kijun-sen lines are plotting towards. But the more crucial support will be the 50-day SMA near 0.9580.
In case of a steeper selloff, the recent floor around 0.9520 would likely get tested again and if breached, this would reinforce the bearish outlook.
To sum up, EURCHF needs to overcome immediate resistance around the cloud top if the current upswing is to last. But only a climb above the 200-day SMA would improve the longer-term picture.
EURCHF jumps 1% in a week after surprise SNB pause
Short-term bias is still bullish
But obstacles lie ahead
EURCHF has leapt higher over the past week, climbing well above its 50-day simple moving average (MA) and entering the Ichimoku cloud. The momentum indicators are maintaining the short-term positive bias as the RSI is edging towards the 70 overbought level, while the MACD is ascending above zero and its red signal line.
However, although the bulls remain firmly in control, the road ahead may become more challenging. Prices are currently trading around the 61.8% Fibonacci retracement of the September 2022 – January 2023 uptrend at 0.9668 after easing slightly from yesterday’s peak of 0.9684 when they briefly bumped into the descending trendline. Adding to the strong resistance in this area is the top of the Ichimoku cloud at 0.9681.
Pushing higher will likely require some force, but if successful, the path is clear until the 50% Fibonacci of 0.9750, after which attention would turn to the 200-day SMA at 0.9775. A break above the 200-day SMA would help shift the bearish medium-term trend to a bullish one.
On the other hand, if the resistance around the cloud top continues to cap gains, EURCHF could revert lower. There may be some support in the 0.9600 region that is the current base of the Ichimoku cloud and also where the Tenkan- and Kijun-sen lines are plotting towards. But the more crucial support will be the 50-day SMA near 0.9580.
In case of a steeper selloff, the recent floor around 0.9520 would likely get tested again and if breached, this would reinforce the bearish outlook.
To sum up, EURCHF needs to overcome immediate resistance around the cloud top if the current upswing is to last. But only a climb above the 200-day SMA would improve the longer-term picture.
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