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EURCHF Price Dropping Towards Critical Support Level

EURCHF Price Dropping Towards Critical Support Level

Martin Essex, MSTA, Analyst

EURCHF price, chart and analysis:

  • EURCHF is dropping towards an important support level.
  • If that breaks, it could reach its lowest in more than a year.

Our trading forecasts for Q3 have been published; you can find them here.

And check out the IG Client Sentiment data to help you trade profitably.

EURCHF could extend its losses

EURCHF has been falling steadily for three days now and is currently trending lower, with the price below the 50-day simple moving average, which is in turn below the 100-day sma, which is itself under the 200-day sma. Moreover, the 14-day relative strength index, at 34.6, remains above the 30 level that would signal the cross has been oversold.

EURCHF Price Chart, Daily Timeframe (July 7, 2017 – August 30, 2018)

Latest EURCHF daily price chart.

Chart by IG

This suggests that EURCHF could fall further and, if it does, the key level to watch out for will be 1.1243, the low reached on August 15, just over two weeks ago. If that is broken, the cross will be back at levels last seen 13 months ago in July 2017, potentially leading to further falls to around 1.1025, where it traded for several days between July 11 and July 24 last year.

Its decline this week can be seen clearly on the 10-minute chart below.

EURCHF Price Chart, 10-Minute Timeframe (August 28 – 30, 2018)

Latest EURCHF 10-minute price chart.

Chart by IG

To the upside, resistance lies at this week’s 1.1454 high and then at the 1.1558 high touched on August 8.

EURCHF Sentiment

Note, though, that there is currently no clear signal from retail trader positioning data. This currently shows 59.8% of traders are net-long, with the ratio of traders long to short at 1.49 to 1. In fact, traders have remained net-long since May 23, when EURCHF traded near 1.1882; the price has moved 4.7% lower since then. The number of traders net-long is 1.8% higher than yesterday and 14.9% lower from last week, while the number of traders net-short is 11.5% lower than yesterday and 12.7% higher from last week.

At DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EURCHF prices may continue to fall. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us no clear EURCHF trading bias.

EURCHF sentiment chart.

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--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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