Technical Analysis – EURCHF stuck at lower part of prevailing rectangle
July 3, 2023 8:27 am
EURCHF remains firmly inside the rectangle that has been defining the price action since October 13, 2022. It is currently trading at the lower section of this rectangle, hovering around the 50-day simple moving average (SMA). The downward sloping trendline from June 9, 2022 appears to cap the upside at this stage with the bears contemplating the idea of another breakout.
The persistent SMAs’ convergence is usually associated with an imminent move, but it also reveals a delicate balance between market participants. A balance confirmed by the muted momentum indicators. The Average Directional Movement Index (ADX) remains stuck below its 25-threshold and thus signaling a range-trading market, and the stochastic oscillator is trading sideways, preparing to test the resistance set by its moving average.
Should the bulls decide to push the market higher, they would have to overcome the key June 9, 2022 downward sloping trendline and the much talked-about 0.9823-0.9841 area. This is occupied by the 100- and 200-day simple moving averages (SMAs) and the 38.2% Fibonacci retracement of the June 9, 2022 – September 26, 2022 downtrend respectively. If successful, they would set their eyes on the upper boundary of the rectangle, a tad below the 0.9958-0.9971 range.
On the other hand, the bears are keen on another breakout provided they manage to break the 0.9759 level set by the 50-day SMA. They could then revisit the lower boundary of the rectangle with the real target being the 0.9650-0.9665 range that eluded them at the May 30 drop. This area is defined by the January 15, 2015 low and the 23.6% Fibonacci retracement respectively.
To sum up, EURCHF bears’ continued inability to successfully stage a breakout keeps the door open to upward moves.
EURCHF remains firmly inside the rectangle that has been defining the price action since October 13, 2022. It is currently trading at the lower section of this rectangle, hovering around the 50-day simple moving average (SMA). The downward sloping trendline from June 9, 2022 appears to cap the upside at this stage with the bears contemplating the idea of another breakout.
The persistent SMAs’ convergence is usually associated with an imminent move, but it also reveals a delicate balance between market participants. A balance confirmed by the muted momentum indicators. The Average Directional Movement Index (ADX) remains stuck below its 25-threshold and thus signaling a range-trading market, and the stochastic oscillator is trading sideways, preparing to test the resistance set by its moving average.
Should the bulls decide to push the market higher, they would have to overcome the key June 9, 2022 downward sloping trendline and the much talked-about 0.9823-0.9841 area. This is occupied by the 100- and 200-day simple moving averages (SMAs) and the 38.2% Fibonacci retracement of the June 9, 2022 – September 26, 2022 downtrend respectively. If successful, they would set their eyes on the upper boundary of the rectangle, a tad below the 0.9958-0.9971 range.
On the other hand, the bears are keen on another breakout provided they manage to break the 0.9759 level set by the 50-day SMA. They could then revisit the lower boundary of the rectangle with the real target being the 0.9650-0.9665 range that eluded them at the May 30 drop. This area is defined by the January 15, 2015 low and the 23.6% Fibonacci retracement respectively.
To sum up, EURCHF bears’ continued inability to successfully stage a breakout keeps the door open to upward moves.
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