EURCHF pivoted northwards to re-enter the 0.9900 territory after its latest pullback in the four-hour chart ceased near the 50-period simple moving average (SMA) at 0.9870.
There are a couple of bullish signs, which feed optimism that the current recovery mood could persist in the coming sessions. The RSI has bounced back above its 50 neutral mark, the stochastics have resumed their upward slope, while the MACD, although beneath its red signal line, seems to be gaining positive momentum.
Trend signals are also rosy. Besides the bullish cross between the 20- and 50-period simple moving averages (SMAs) and the rebound on the penetrated bearish channel, investors will closely monitor the formation of a bullish inverse head and shoulder pattern set around the seven-year low of 0.9803. To confirm the bullish pattern, the pair will need to successfully violate the neckline at 0.9945. If that turns out to be the case, the price could initially test the limits around 0.9975 before speeding up to July’s high of 1.0045. Beyond that, the next target will be the 200-period SMA at 1.0093.
Should the bears retake control, they will first attempt to breach the 50-period SMA at 0.9875 with scope to access the 0.9832 – 0.9803 support zone. A durable move below the latter would open the door for the key 0.9736 – 0.9700 area, where the channel’s lower boundary and the 2015 base are placed. Lower, all attention will turn to the 2015 bottom of 0.9649.
In brief, EURCHF is surrounded by positive vibes in the short-term picture. A sustainable rally above the threshold of 0.9945 is expected to attract new buying interest in the market.
