• EURCHF remains confined in a two-month-old trading range, forming a rectangle on the daily chart.
  • Golden cross favours bullish traders and supports prospects for an eventual breakout to the upside.
  • The positive momentum might then push the pair back towards YTD tops, around the 1.0915 region.
  • Meaningful dips below 50-day SMA might be seen as a buying opportunity near the 1.0725-20 area.

 

EURCHF has been oscillating in a broader trading range over the past two months or so, forming a rectangle on the daily chart. The rectangle exhibits a period of consolidation or a tug of war between buyers and seller and thus, warrants some caution before placing any aggressive directional bets.

However, the occurrence of a golden cross on the daily chart favours bullish traders and supports prospects for an eventual break from the trading range resistance. The golden cross occurs when a short-term moving average (50-day SMA) crosses over a major long-term moving average (200-day SMA) to the upside and is interpreted as signalling a definitive bullish trend.

That said, bulls might still need to wait for a sustained move beyond the 1.0840-50 supply zone before positioning for any further appreciating move. The pair might then surpass monthly swing highs resistance near the 1.0875-80 region and aim back to reclaim the 1.0900 handle before eventually darting to YTD tops, around the 1.0915 level.

On the flip side, the 50-day SMA, around the 1.0770 zone, now seems to protect the immediate downside. Any subsequent slide might still be seen as a buying opportunity near the trading range support, around the 1.0725-20 region. This is followed by the 1.0700 handle and the very important 200-day SMA support, around the 1.0685 area, which should act as a stop-loss level of bullish traders.