EUR/CHF Breaks Above Downtrend Line: What’s Next?The daily chart for the EUR/CHF pair has recently revealed a bullish movement, successfully breaking above its descending trend line. This development indicates a potential shift in market sentiment, occurring after the price touched a significant support level at 0.9250. The fact that the price has breached the downtrend line after reaching this support suggests a potential influx of buying pressure in the short term. Currently, the pair is trading near the horizontal resistance zone at 0.9400, which has been tested multiple times in the past.
Possible Scenarios
Buy Scenario:
With the price having broken above the downtrend line, sustained trading above 0.9400 could signal a bullish move in the coming days.
A stop loss could be placed around 0.9310 (approximately 90 pips below the current price).
For a more conservative approach, a stop loss could be set below 0.9240 (about 160 pips).
Take Profit Opportunities:
TP1 at 0.9490, near the recent high (about 90 pips).
TP2 at 0.9590, targeting the next resistance area (approximately 190 pips).
Alternative Scenario:
If the price fails to maintain itself above 0.9400 and retreats below the trend line, this could indicate a potential continuation of the downtrend. In such a case, a short entry could be evaluated around 0.9350:
Stop Loss: Above the high of the previous candle, at around 0.9420 (approximately 70 pips).
TP1: At 0.9250, which serves as significant support and a recent low (around 100 pips).
Important Technical Factors to Note:
Trend Line: The break of the descending trend line suggests a reduction in selling pressure.
Resistance Zone: The area between 0.9400 and 0.9450 will be a critical test for buying strength.
Strong Support: The 0.9257 level remains a crucial point that buyers have defended in prior downtrends.
Fundamental Considerations
Euro (EUR): The euro's strength is influenced by Eurozone economic data and the European Central Bank (ECB) decisions. The recent release of the Consumer Price Index (CPI), showing inflation at 2.2%, is close to the ECB’s target. This indicates that the ECB may adopt a dovish monetary policy in the short to medium term, which could negatively impact the euro's strength.
EUR/CHF is at a pivotal technical crossroads. The break of the descending trend line supports a bullish outlook in the short term, with initial targets set at 0.9490 and 0.9590. However, a failure to overcome the current resistance could see sellers regain control, with possible targets around 0.9300 and 0.9257. Traders should closely monitor price reactions to these critical levels before entering positions.
Disclaimer
74% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you understand how CFDs work and if you can afford the high risk of losing your money. Past performance is not indicative of future results. Investment values may fluctuate, and you may not recover your initial investment. This content is not intended for residents of the UK.
