EUR/CHF continues to trade inside a falling wedge pattern from around the beginning of December. According to the TA books, such patterns tend to break to the upside, but until we do not get a break of the upper side of it, we would not be able to examine the upside. As long as the rate stays inside the pattern, we will continue looking south.
The pair might move a bit higher, but if the bulls cannot push it through the upper side of the wedge, this may result in another round selling, potentially bringing EUR/CHF to the 1.0840 area again. If the selling doesn’t stop there, the next support zone to consider could be the 1.0833 mark, or the lower side of the aforementioned wedge pattern.
Our oscillators, the RSI and the MACD, are giving us mixed signals. The RSI, although still below 50, started pointing and moving higher. The MACD is somewhat in support of the downside, as it remains below zero and trigger lines, while currently running flat. We will no put too much emphasis on the indicators, until we get a clear picture from both of them.
Alternatively, if we do see a clear strong break above the upper side of the falling wedge pattern, we will then aim for the 1.0904 barrier, which is near the highs of December 27th and 30th. The pair might stall around there, or even correct back down a bit. That said, if the pair remains above the upper side of the wedge, the bulls might re-enter the field and lift the rate up again. If this time the 1.0904 obstacle surrenders, its break could clear the way to the 1.0927 level, marked by the high of December 19th.
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