Daily brief: Swiss franc firming against US dollar and euro but will momentum take CHF higher?
EUR/CHF and USD/CHF put in Double Tops at the same time in May and June; EUR/CHF has moved considerably lower since, but USD/CHF has held up better and ith USD/CHF making lower lows and lower highs, will it follow EUR/CHF down?
EUR/CHF technical analysis
EUR/CHF made a 7.5-year low at the end of last month at 0.9699, moving below the previous low of 0.9804.
Since breaking lower, the price has not managed to reclaim 0.9804 and it may continue to offer resistance. The 21-day Simple Moving Averages (SMA) is currently at that level, potentially adding resistance.
Further up, the recent peak of 0.9957 might offer resistance ahead of the break point at 0.9973.
In the last session, the price has crossed below the 10-day SMA and remains below the 21-, 55-, 100- and 200-day SMAs.
A bearish triple moving average (TMA) formation requires the price to be below the short term SMA, the latter to be below the medium term SMA and the medium term SMA to be below the long term SMA. All SMAs also need to have a negative gradient.
Looking at EUR/CHF, the criteria for a bearish TMA has been met and may indicate that bearish momentum could evolve further.
Support might be at the recent low of 0.9699 or further down at the 161.8% Fibonacci Extension of 0.9638.
USD/CHF technical analysis
USD/CHF has bounced off low made at the start of this month at 0.9470 to trade in a wide range of 0.9545 – 0.9650. These levels might provide support and resistance respectively.
While the price is below all short-, medium- and long-term Simple Moving Averages (SMA), they have positive and negative gradients. This may suggest a lack of conviction for directional momentum that might see further range trading.
Re-iterating this possibility is the price criss-crossing the 10-day SMA. Recent history has shown that when the price crosses the 10-day SMA, momentum in that direction continues. That is not the case over the last week.
The recent low of 0.9470 may provide support ahead of the break point at 0.9460. On the topside, resistance might be at the break point of 0.9710 or the July peak of 0.9886.
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