EURCHF has once again bounced off the lower boundary of the wide 0.9741-1.0006 rectangle. This rectangle has been dominating the price action since October 13, 2022, revealing a very delicate balance between buyers and sellers. Last week’s events contributed to the upmove, but the 0.9825-0.9827 area acted again as strong resistance.
This acute range-trading is evident in the various technical indicators used. The simple moving averages (SMAs) are converging, and the Bollinger bands are tightening aggressively. In addition, while the Average Directional Movement Index (ADX) is trading a tad above its 25-threshold, its respective subcomponents remain stuck at low levels. More interestingly, the stochastic oscillator is battling with its moving average and a break above it could be perceived as a bullish sign.
Should the bulls decide to push the market higher, they would have to overcome the 0.9825-0.9827 area populated by the 38.2% Fibonacci retracement and the 200-day SMA. The next resistance is defined by the 50- and 100-day SMAs at the 0.9867-0.9895 range. Even higher, the bulls could be faced with the busy 0.9958-0.9971 area set by 50% Fibonacci retracement of the June 9 – September 26 downtrend and the March 7, 2022 low.
On the other hand, the bears would prefer a retest of the lower boundary of the wide rectangle and the November 14, 2022 low at 0.9741 and 0.9706 respectively. A decisive move below these two levels could be a massive win for the bears. Even lower, the 0.9650-0.9665 area would probably be a key test for the bears’ resolve.
To sum up, EURCHF is still obeying the wide rectangle as both the bulls and the bears appear unable to stage a breakout. However, there are increasing signs of a sizeable move coming soon.
