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EUR/CHF looks to have made a decisive break to the upside and is now well placed to return to the highs between 1.11 and 1.12 reached in the first half of last year.
As the chart below shows, the cross has been heading higher since it broke out of a bullish falling wedge pattern. It still needs to break above 1.10, which is both psychologically important and a high reached on September 1 last year but, once it does, there is little to stop it climbing to 1.11.
Chart: EUR/CHF Daily Timeframe (May 2016 to July 6, 2017)
The cross recorded several highs in the 1.11-1.12 range in the first half of last year – 1.1105 on June 3, 1.1128 on May 20 and 1.1197 on February 4 – and is in a good position to pick those off one by one. As the RSI at the bottom of the chart shows, it is approaching overbought territory but not there yet, and if the 20-day moving average (in green) crosses above the 50-day (in black) upward momentum would be confirmed.
On the downside, there is support at 1.09, where the 20- and 50-day moving averages have converged, at 1.0870 from the former trendline resistance and then at 1.0830 from the recent lows.
--- Written by Martin Essex, Analyst and Editor
To contact me, email me at martin.essex@ig.com
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