EURCHF: A Move Lower, Likely to Pivot on Medium Term Support Before Ascent
The daily chart below shows the recent price history for the Euro currency (EUR) versus the Swiss Franc (CHF); this currency pair is known as the EURCHF. Currently the pair has already closed for today’s trading session and for the week and ended at 1.2357 (as of publication) just near lows for the day. Also earlier today, as noted by the Market Directions Blog of WorldWideMarkets.com, key technical levels may have provided resistance leading to the bearish price behavior in the EURCHF.
Over the medium term the price action has been choppy. However, the short term bearish momentum was highlighted as bearish in a previous article on the pair in late August 2013 where support was found on a line parallel to the bullish medium term channel (point 3 in green on chart). This was noted as a likely event along with the EURCHF trading near 1.2350 by early September - and the latter of which may be targeted yet again in the short term.
If the steep bearish momentum of the last three trading sessions continues, then the EURCHF pair may target this line (point 3) sooner. It could find support near the middle (median) line of the linear regression channel (point 8 in blue). On the contrary, looking at the short term bullish trend line (point 2 in aqua) that has developed since the August article - covering the EURCHF - it appears that support could be maintained on this line and further help from the intersecting support line of the medium term bullish channel (point 3) with a target of the upper line of the linear regression channel (point 8).
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.2388 with a Limit to take profit @ 1.2411 and a stop-loss @ 1.2370 Risk/Reward Summary: Limit risk = +23 pips profit / (-18) Stop-loss risk = Gain to Loss ratio = 1.27
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.2349 with a Limit to take profit @ 1.2301 and a stop-loss @ 1.2379 Risk/Reward Summary: Limit risk = +48 pips profit / (-30) Stop-loss risk = Gain to Loss Ratio = 1.60
Medium term daily candle chart: