EUR/CHF has come under steady downside pressure over the past week or so. However, a variety of near-term focused time cycle techniques suggest the cross is nearing a medium-term turn window where a change in trend could materialize. With the Swiss National Bank frequently intervening in the exchange rate, cycle analysis becomes harder but not totally irrelevant. This is especially the case when the cyclical picture begins to turn in the direction that the central bank favors. This looks to be the case in EUR/CHF over the next few days.
The 1.2120-1.2200 area has been an important support zone since late February. A daily chart shows a potential inverse Head & Shoulders pattern (based on closing prices) forming on the daily that could lead to another push higher. The 78.6% retracement of the late April advance in the 1.2180 area marks and idealized level from which the right shoulder could carve out and we like the reward-to-risk of getting long against this level over the next few days.
EUR/CHF Daily Chart: May 2, 2013
Charts Created using Marketscope – Prepared by Kristian Kerr
Event Risk Over Coming Sessions:
Source: DailyFX Calendar
LEVELS TO WATCH
Resistance: 1.2290 (38% retracement of Jan to Feb decline), 1.2345 (April high)
Support: 1.2180 (78.6% retracement of late April advance), 1.2135 (April Low close)
STRATEGY – Buy EUR/CHF
Stop: Close below 1.2135
Target 1: 1.2290
Target 2: 1.2345
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail firstname.lastname@example.org. Follow me on Twitter at@KKerrFX.
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