EUR/CHF dropped sharply to as low as 1.1728 last week as the decline from 1.2004 resumed and accelerated. The development further confirmed rejection by 1.2 key resistance. Initial bias stays on the downside this week for 61.8% retracement of 1.1445 to 1.2004 at 1.1659. Sustained break will target key support level at 1.1445. On the upside, above 1.1776 minor resistance will turn bias neutral first. But near term outlook will remain bearish as long as 1.1864 support turned resistance holds.
In the bigger picture, current development suggests solid rejection by prior SNB imposed floor at 1.2000. Considering bearish divergence condition in daily MACD, 1.2004 could be a medium term top. And price action from 1.2004 is correcting the up trend from 1.0629. Hence, for now, deeper fall could be seen back to 1.1445, which is close to 38.2% retracement of 1.0629 to 1.2004 at 1.1479. We’d expect strong support from there to bring rebound to extend the medium term corrective pattern.
