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EUR/CHF Daily Chart 2:20PM EDT 10/11/2012
Changed market dynamic: It’s been about a month since the EUR/CHF rallied sharply from the 1.20 floor that the Swiss National Bank pledged to support. In the previous update, I noted that the spike was different than some previous spikes, and indeed the dynamic has changed. The market did no fall back to 1.20, at least not yet, and the rally was able to push through the 1.2145-1.2155 resistance zone. However the market has since retreated.
1.0266 pivot: Today (10/11), we see the recent bearish market take the EUR/CHF down to a previously noted pivot at 1.0266, around which we saw major reactions during 2 previous spikes. During these occasions, the weak bulls saw supply/resistance here and retreated to the 1.20 floor.
This time it is the a bearish attempt that is finding demand/support here. The 10/11 daily candle shows a strong rejection from this level as the EUR/CHF bounces back towards the 1.2090 area where the session began.
Also note the coincidence of the 61.8% retracement of the 1.1994-1.2183 swing at this 1.2066 pivot.
Bullish bias in the 4H chart: The 4H chart shows a market that has some bullish bias. The ability to stretch the Bollinger Band upwards (here they are 3 std deviations from the 200-SMA) is a sign of strong bullish intent. The market has since slowed and the 200-day SMA has caught up. Sometimes this is a sign that the market is ready to continue after a bearish correction cycle, though we might whip around the 200-SMA for a while in the short-term.
The RSI has been tagging 70 and failing to sustain a break below 40. Holding above 40 and pushing back above 60 would reflect a market holing on to the bullish momentum seen in the 4H chart. A strong close below 1.2060 and push of RSI below 40 takes away the bullish bias brings back the 1.20 as a gravitational target for EUR/CHF.
Otherwise, we can be building more and more clues that dynamics have changed, and that EUR/CHF is ranging above 1.20 with upside toward 1.22 or even higher.
EUR/CHF 4H Chart 2:28PM EDT 10/11/2012
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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