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USD/CHF, EUR/CHF Weekly Forecast: Correction May Lead to a Downtrend Move

USD/CHF, EUR/CHF Weekly Forecast: Correction May Lead to a Downtrend Move

2019-10-17 14:00:00
Mahmoud Alkudsi, Analyst
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EUR/CHF and USD/CHF Technical Analysis

Did you check our latest forecasts on USD and EUR and Gold? Find out more for free from our Q4 forecasts for commodities and main currencies

USD/CHF, EUR/CHF – Price action

Last week Swiss Franc softened slightly against Euro and US Dollar. USD/CHF closed the weekly candlestick with a 0.1% gain. Meanwhile, EUR/CHF closed on Friday with nearly 0.7% gain. This, week this uptrend move has paused highlighting a possible downside move may be on the horizon.

Today, the Relative Strength Index (RSI) fell sharply from 58 to 43 on USD/CHF signaling the end of uptrend move and a possible start of a downtrend momentum. On the other side, the oscillator dropped from 63 to 57 pointing out buyer’s loss of territory on EUR/CHF.

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USD/CHF Daily Price Chart (AUG 28, 2017 – Oct 17, 2019) Zoomed Out

USDCHF price daily chart 17-10-19 Zoomed out

USD/CHF Daily Price Chart (June 17 – Oct 17, 2019) Zoomed IN

USDCHF price daily chart 17-10-19 Zoomed in

Looking at daily chart, we notice since Oct 3 USD/CHF failed in multiple occasions to close above 1.0008 reflecting the buyer’s hesitation to keep pushing the price higher. On Tuesday, the price corrected lower and created a lower high at 0.9996.

Today, the price broke below the uptrend line originated from the August 26 low at 0.9722, then declined to a lower trading zone 0.9860- 0.9930 eyeing a test of the low end. Hence, a close below the low end of the zone could see USDCHF trading even lower towards 0.9758. Although, the weekly support levels underlined on the chart (zoomed in) should be considered.

On the flip-side, any close above the high end of the zone could push USDCHF towards the vicinity of 1.0008-15. Further close above these levels could cause another rally towards 1.0128. Nevertheless, the weekly resistance levels underscored on the chart should be watched closely.

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EUR/CHF Daily Price Chart (FEB 10, 2017 –Oct 17, 2019) Zoomed Out

EURCHF price daily chart 17-10-19 Zoomed out

EUR/CHF Daily Price Chart (JUNE 19 – Oct 17, 2019) Zoomed IN

EURCHF price daily chart 17-10-19 Zoomed in

From the daily chart, we notice on Oct 10 EUR/CHF closed above the 50-day average signaling a start of a bullish move. On Friday, buyers pushed the price above the neckline of double bottom pattern located at 1.1033. However, they failed to force a close above it, indicating to a lack of momentum to keep rallying the price.

This week, same scenario has been repeated. The price remained in the old trading zone 1.1057 – 1.0960 pausing recent uptrend move and hinting to a possible correction may come next. Hence, a break below the low end of the zone could send EURCHF towards 1.0810. That said, the weekly support levels underlined on the chart (zoomed in) should be kept in focus.

On the other hand, any failure in closing below the low end could push EURCHF towards the high-end contingent on clearing 1.1001. Further close above the high end of the zone could cause a rally towards 1.1190. That said, the weekly resistance areas marked on the chart would be worth monitoring.

Written By: Mahmoud Alkudsi

Please feel free to contact me on Twitter: @Malkudsi

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

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