Price & Time: False Break in EUR/CHF?
- Broke the 200-day MA this week
- Still at the low end of a 3-month range
- SNB supporting the cross
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EUR/CHF has been locked in a clear sideways to lower range for the better part of three months. On the downside this range has been supported by the 200-day moving average until the start of this week when the upwards sloping 200-day moving average near 1.2300 was eclipsed on both an intraday and daily close basis. Technically this suggests a potential change in trend is occurring. However, in our experience there is usually a lot of “noise” surrounding the initial break of widely watched indicators like a 200-day moving average and often times such breaks lead to powerful moves back in the direction of the trend as aggressive breakout type traders are forced to cover. Given EUR/CHF is at the bottom end of a clear range and has the support of the SNB, such a false break scenario materializing here is not that unlikely. We like positioning for such a potential scenario with a buy stop over today’s intraday high of 1.2309. Any weakness below Monday’s low of 1.2275 would turn the technical picture much more negative.
EUR/CHF Daily Chart: September 25, 2013
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risks in Coming Sessions:
LEVELS TO WATCH
Resistance: 1.2309 (intra-day high), 1.2380 (Fibonacci)
Support: 1.2275 (Monday’s low), 1.2300(Psychological)
Strategy: Buy EUR/CHF
Entry: Buy EUR/CHF on a break of 1.2309
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.