EURCHF recorded its largest daily gain in more than a year on Monday after repeatedly failing to clear the tough 1.0500 bottom. On Tuesday the pair is attempting to claim a similar credit, but it first needs to remove the 1.0652 resistance and close above 1.0700 to confirm additional buying action.
The momentum indicators are in favor of the bulls as the MACD is hovering within the positive area – barely though – for the first time since the end of 2019, while the RSI is rising with a steep positive slope above 50. Yet, any improvement in the price should be treated carefully as the latter is not far from its 70 overbought mark. It is also worth noting that the narrowing gap between the 20- and the 50-day simple moving averages (SMAs) could enhance the bullish action, especially if a positive cross is completed.
Beyond the 1.0700 number, which coincides with the 38.2% Fibonacci of the 1.1030-1.0500 downleg, the 200-day SMA and the 50% Fibonacci of 1.0770 could act as immediate resistance. Moving higher, the battle could turn more challenging between the 61.8% Fibonacci of 1.0830 and the long-term descending trendline that has been strongly rejecting upside movements since mid-2018.
On the downside, traders could initially look for support near the 20- and 50-day SMAs that currently converge to 1.0550 and then around the 1.0500 bottom. Should sellers persist, the pair could visit the 1.0400 number, further cementing its long-term downtrend.
In short, EURCHF seems to be trading within bullish waters, however only a decisive close above 1.0700 could switch the near-term outlook from neutral to positive.
