EURCHF is edging higher today, bouncing off the 50-day simple moving average (SMA). The pair continues to trade inside the wide 0.9706-1.0006 rectangle established since October 13, 2022. The recent price action amidst elevated volatility clearly points to a precarious balance in the market, reinforced by the various upside breakouts that proved to be false. This balance is also evident in the Average Directional Movement Index (ADX) that has gradually dived below its 25-threshold and thus is signaling a purely trendless market at this juncture.
Once again, the stochastic oscillator has a more interesting story to tell. It has entered its overbought territory for the first time since the mid-January false breakout. It holds a decent gap from its moving average, potentially pointing to some upside pressure still left in the tank. But more importantly, there is a bearish divergence developing. The higher highs in the stochastic have been matched with lower highs in EURCHF.
Should the bulls decide to take over the market, they would be faced with the busy 0.9958-0.9971 range set by 50% Fibonacci retracement of the June 9 – September 26 downtrend and the March 7, 2022 low. Even higher and assuming that the new upside breakout does not prove to be false again, the 1.0089-96 range defined by the 61.8% Fibonacci retracement and the January 13 high respectively could trouble the bulls.
On the other hand, the bears would have to deal with the 50- and 100-day SMAs at the 0.9898-0.9912 area first. Lower, the 0.9827-33 range could prove tougher to crack as it is defined by the 200-day SMA and the 38.2% Fibonacci retracement respectively. The path would then be unhindered until the 0.9706 level, the lower boundary of the ongoing rectangle.
To sum up, EURCHF bulls are trying to establish some degree of market control, but the overall technical picture looks unfavourable for them. Should the bearish divergence materialize, a drop towards the 0.9827 area could be easier than currently envisaged.
. The pair continues to trade inside the wide 0.9706-1.0006 rectangle established since October 13, 2022. The recent price action amidst elevated volatility clearly points to a precarious balance in the market, reinforced by the various upside breakouts that proved to be false. This balance is also evident in the Average Directional Movement Index (ADX) that has gradually dived below its 25-threshold and thus is signaling a purely trendless market at this juncture. ){kind=link}