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15:29:27 04-04-2024

EUR/CHF Price Analysis: Road to parity now open

  • EUR/CHF has reversed its intermediate-term downtrend and is rallying strongly.
  • There are few technical obstacles in the way until the pair reaches parity. 
  • EUR/CHF is oversold according to the RSI which suggests the risk of a pullback.  

EUR/CHF is trading at 0.9847 as it rallies higher, extending an uptrend on both a short and intermediate time frame. The road is open and parity is in sight. 

Euro to Swiss Franc: Daily chart

The pair has broken above all major moving averages and a major trendline for the downtrend, suggesting the bear trend has been broken. 

EUR/CHF has formed more that two higher highs and higher lows since reversing at the January lows, establishing a rising pattern of peaks and troughs. Overall this is a sign it is in a young uptrend on the daily chart, commonly used to assess the intermediate-term trend (lasting 3-6 months). 

Given the old adage that “the trend is your friend until the bend at the end,” EUR/CHF is expected to continue its new uptrend higher. 

The next key resistance level is at around parity suggesting the pair could rally up to that level without much obstruction. 

The red 50-day (Simple Moving Average) has crossed above the 100-day SMA which is a bullish signal. It has also just crossed above the 200-day SMA. However, in the case of the 200, the longer MA was still falling marginally during the crossover, watering down its reliability – disqualifying it by a hair’s breadth from being a Golden Cross. 

The Relative Strength Index (RSI) is in the overbought zone above 70 suggesting there is a risk of a pullback. If it crosses back down below 70 it will give a sell signal and more strongly indicate a correction is underway. This, however, would not be enough to reverse the uptrend, merely suggest a pullback was underway. 

With the RSI over 70 traders are recommended not to open any fresh long positions. 

The long-term trend, seen on the weekly chart, is still undecided. Although price has reversed and punched higher it is unclear what the trend is, although the strength of the recovery suggests it may soon confirm an uptrending bias.


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