EUR/CHF was getting as close as it has been to the 1.20 level since 2012 when the SNB affirmed its intention to keep EUR/CHF above 1.20. In the 4H chart we can see price dip to 1.2044 in early September. However price action has not been bearish in September. Instead it has been sideways and maybe even a little bullish.
(click to enlarge)
Double Bottom: We can say that there was a double bottom completed when price cleared above 1.2080 and rallied to 1.2118 last week. The RSI pushed above 70 to show nascent bullish momentum in the 4H chart.
Even though price broke above the 100-, and 50-period SMAs in the 4H chart, it held below the 200-period SMA, as well as the highs from August 18-20. This shows that bulls are still tentative.
Bearish Scenario: The bearish outlook is also kept on the shelf, as long as price holds above 1.2080. Today, price came down to test this level and we are indeed seeing some support at the moment. If price can now return above 1.21, we should see bullish bias because it would show respect of the 100-, and 50-period SMA as support. It would also clear above the 200-period SMA. Also, if the RSI can hold above 40, the bullish momentum in the 4H chart is still in play.
Bearish Scenario: A break below 1.2070 with the 4H RSI falling below 40 would put away the bullish outlook and keep EUR/CHF in a sideways-bearish market, though the downside risk should be limited to 1.20, and we need to consider possible intervention by the SNB that might cause bullish volatility around 1.20.
Anticipation: We should probably consider selling from a higher price for quick gains, or buying and holding around 1.20 for medium to long-term appreciation back toward the highs this year. In the daily chart, we can that if the current double bottom is confirmed and we get another rally, we should first watch 1.2133-1.2150 area for sellers (previous support pivot and the 100-day SMA). Then the 1.2177-1.2190 area might be the next level for sellers (resistance pivot and 200-day SMA).
(click to enlarge)
Previous Post by Author: AUD/USD and AUD/JPY Seeks Double Bottoms