EURCHF Upside Forex Breakout – Nov 24, 2014

0
118
EURCHF Upside Forex Breakout - Nov 24, 2014

EURCHF Upside Forex Breakout - Nov 24, 2014

After days of tight consolidation, EURCHF is showing a bit more action as traders continue to price in expectations of SNB intervention or a reaction to the gold initiative. Remember that this initiative would require the central bank to keep 20% in gold reserves, which would limit its powers to keep the franc weak.

However, rumor has it that there are SNB orders at the 1.2000 mark, which means that the central bank is ready to take action once the EURCHF pair tests the floor. This could lead to a strong rally for EURCHF possibly until the 1.2200 levels and beyond.

EURCHF Forecast

On the other hand, lack of action from the SNB could mean significant downside for the pair, as traders price in the effect of the latest ECB easing moves and further economic weakness for the region. The SNB could be aiming to lower the floor though and be ready with intervention at lower levels.

For the meantime, until actual updates are seen, EURCHF could consolidate around the 1.2000 floor and may stay in range until the 1.2050 area of interest. A move past this area could mean a slow climb to 1.2100.

The recent announcement by Draghi saying that the ECB is ready for more easing to boost inflation seems to have been ignored by EURCHF, as the pair barely moved up or down after the event. Traders normally short the Swiss franc when the ECB gears up for more stimulus in anticipation of intervention moves from the SNB, but this hasn’t been the case so far.

Take note though that a doji can be seen on the weekly time frame, reflecting the hesitation of buyers and sellers at this point. A strong green candle closing above the high of the doji could be a sign that further gains are in the cards while a weekly candle close below the doji’s low could invalidate the potential EURCHF reversal signal.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

SHARE
Previous articleAUDUSD Double Bottom Forex Setup – Nov 24, 2014
Next articleGoogle Shares Show Upside Momentum Again – Nov 24, 2014
Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.