Since the beginning of the year the currency pair gained more than 6.5% plus last week rallied over 0.5% and made a phase change, shifting from a recovery to an accumulation phase.
Last week the EURCHF went back and forward without any clear direction with a narrow range plus a narrow spread, closing in the middle of the weekly range however managed to close above the previous week high, which suggests bullish momentum.
The currency pair is made a new high for the year although seems to the losing the upward steam.
The stochastic is showing an extreme overbought market and is beginning to display a weak bearish momentum.
Expecting an upward move to 2017 high at 1.1537 on a bounce from a Fibonacci retracement at 1.1324 (scenario 1) however a break below the Fibonacci retracement at 1.1324 may push the currency pair downward to a key level at 1.1199 (scenario 2).
Since the start of the year the currency fell more than 9.5% and this past week rose 0.3%.
Last week the EURCHF rose with a narrow range, creating an inside week and closed near the high of the week suggesting a slight bullish momentum.
The Stochastic is displaying a bearish momentum although is above the 50 mid line suggesting that the pair might recover.
The EURCHF is in a warning phase since mid-October and is trading below two moving averages the 10, 200 but above the 50 week moving average.
Expecting an upward move to the top of the rising wedge at 1.1151 on a break above of the previous week high at 1.0835 (scenario 1) or a break below previous week low at 1.0755 may throw the pair down to a weekly support at 1.0367 (scenario 2).
One of the most important events last week was the European Central Bank (ECB) dovish comments, whereby the central bank assumed that additional sets of instruments are necessary, including structural tools. This reflected immediate weakness through the EUR currency.
After disappointing inflation data earlier last week, the seasonal adjustment unemployment rate also increased 3.4% in September from 3.3% the month before. The abandoning of the floor, combined with global turmoil did create some downside pressures for the job market.
Since the beginning of the year the EURCHF plunged more than 9.5% and is in a potential phase change from bullish to a warning phase. The currency fell last week with a wide range and closed in the red near the low of the day. Stochastic is showing an overbought market setting lower highs and price is making higher highs, signs that the upside may begin to get exhausted.
Expecting a downward move to a daily support at 1.0620 on a break below previous week low at 1.0781 (scenario 1) or a break above the weekly support at 1.0809 could trigger a rally up to 1.1133 (scenario 2).
Euro zone finance ministers gave their final approval to lending Greece up to 86 billion euros after the parliament in Athens agreed to stiff conditions overnight. Assuming final approval this week by the German and some other national parliaments, an initial tranche of 26 billion euros would be approved by the European Stability Mechanism (ESM) this Wednesday.
Analyst expectations for gross domestic product (GDP) growth in Switzerland turned negative in July for the first time since February over heightened exchange rate uncertainty. But the expectations seem to have changed as the Swiss ZEW investor sentiment index rose by 11.3 points in August to 5.9 points. The Swiss franc has dropped nearly 5% since mid-July and touched a six-month low against the euro on last Tuesday.
The EURCHF is in an accumulation phase since the beginning of August breaking above the resistance zone established on February. The currency rallied last week but could not sustain the upward momentum and gave most of its gains back to the market, creating a potential shooting star pattern, but managed to close in the green above the open of the day. The stochastic in showing an extreme overbought market but even with the pair well into overbought territory, we should not fight the strong upward trend.
Expecting an upward move to a Fibonacci extension at 1.1285 on a break above previous week high at 1.0961 (scenario 1) or a break below the weekly resistance at 1.0620 could trigger a sell-off to a weekly support at 1.0367 (scenario 2).
On the 15th of January EURCHF plunged fast and hard 2.240 pips after an unscheduled and surprise announcement from the Swiss National Bank (SNB) that called an end to their minimum exchange rate which had been in place since September 2011 and ensured that one euro could not buy less than 1.20 Swiss Francs.
The Forex brokers where placed into a state of unrest with the playing field radically redrawn. The unprecedented volatility in Swiss Franc (CHF) crosses and the lack of liquidity resulted in retails accounts being blew beyond those account equities, passing their losses to the brokerage firms and we saw the insolvency of Alpari and FXCM facing losses in excess of $220 million.
Back in November of 2014 my broker ActivTrades decided to increase the margin required on CHF pairs by a multiple of 16 at the time I did not know why and I complained.
The ActivTrades customer support replied that was a measure to protect its clients by substantially limiting their losses. Hence by protecting their clients’ interests and protecting the interests of the company as a whole.
After the fact I question again the customer support to know if ActivTrades were still intact and the reply was that they did not suffer any kind of negative impact as a result of the SNB announcement and preserve their name as a trusted and secure provider.
In conclusion does your broker look after risk assessment and management, pick the right broker if you want to stay in the trading business.