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Technical Analysis – Are EURCHF bulls ready for a breakout?

- Achilleas Georgolopoulos

  • EURCHF trades higher, tests key resistance trendline

  • Strong upmove in place since late January

  • Momentum indicators support the current upleg

EURCHF is trying to record its eighth consecutive green candle since the January 31 trough. It is now testing the resistance set by the June 9, 2022 downward sloping trendline and the upper boundary of a contracting triangle developing since mid-December 2023. This structure is the result of a series of lower highs and higher lows, and declining volatility.

In the meantime, the momentum indicators are supporting the current upleg. In more detail, the Average Directional Movement Index (ADX) is trying to edge higher in order to signal a strong bullish trend, but the D+ indicator remains stuck below its 25-midpoint. Similarly, the RSI has climbed above its 50-midpoint but appears unable to record a stronger move higher. Interestingly, the stochastic oscillator is also trading higher, towards its overbought (OB) territory, and clearly deviating from its moving average.

If the bulls remain confident, they could try to lead EURCHF above the June 9, 2022 trendline and the upper boundary of the contracting triangle. The next target appears to be the busy 0.9550-0.9577 area, provided the bulls manage to quickly overcome the resistance set by the 100-day simple moving average (SMA) at 0.9494

On the flip side, the bears will probably try to regain market control and push EURCHF below the 0.9393-0.9403 area, which is populated by the September 26, 2002 low and the 50-day SMA. The lower boundary of the contracting triangle could then trouble the bears as they would probably set their mind on the crucial all-time low at 0.9253.

To sum up, the recent strong bullish in EURCHF move remains in place, but the bulls need to deliver a bullish breakout in order to confirm that they hold the market reins.

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