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Will The EUR/CHF Seek The Upper Line Of Its Yearly Channel?

Will The EUR/CHF Seek The Upper Line Of Its Yearly Channel?

Quasar Elizundia, Currency Analyst

Interested in becoming a better trader? Check out the guide that DailyFX compiled from the traits that characterized the Most Successful Traders.

Talking Points:

  • Second best trading day for EUR against CHF in July
  • EUR/CHF Trading within consolidation levels
  • Long-term Ascending Channel prevails

Yesterday’s movement in EUR/CHF represented the second best day the cross has seen so far in the month of July as the EUR gained 0.59% over CHF. Movement that is only behind the price action seen in July 12 when EUR/CHF gained 0.67%. Yesterday’s price action was mainly driven by the better than expected results of the German Ifo Business Climate Index.

Long-Term Technical Outlook

EUR/CHF Daily Chart

Will The EUR/CHF Seek The Upper Line Of Its Yearly Channel?

(Created using Marketscope 2.0)

As observed in the EUR/CHF chart shown above, the price levels of February 2015, September 2015, and February 2016 have been registering higher price levels. In a reciprocal manner, the lows registered during this time frame, have been registered at higher price levels. Therefore, with the connection of this set of higher highs and higher lows, we obtain a symmetrical ascending channel. This channel is called symmetrical because both, highs and lows, have been registered within the same upward slope. Channel that during the trading months of 2016 has entered in a consolidation range.

As depicted above, we could observe that prices within this consolidation range recently bounced from support levels of the aforementioned ascending channel in the aftermath of the decision of the U.K. to leave the EU. Bounce that sets the cross in search for its channel resistance.

EUR/CHF 2 Hour Chart

Will The EUR/CHF Seek The Upper Line Of Its Yearly Channel?

(Created using Marketscope 2.0)

As observed in a shorter time frame chart, we could validate this upside momentum as EUR/CHF has now started to register a series of higher highs and higher lows.

Bottom Line:

Given that technical analysis shows that EUR/CHF seems to be respecting the ascending channel formed in 2015 and current price action seems to be validating it with momentum to the upside, further upside strength is expected.

In a contrary manner, if current price action starts to lose momentum and price fails to break July’s 12 high, attention should be directed to July’s 25 low. This given that if price breaks below the aforementioned level, it would invalidate any upside momentum and a retest of the multiyear support channel should be back on the attention of traders.

If you are interested in in knowing more where the EURO might be heading, CLICK HERE!

Written by Quasar Elizundia

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

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