Key Points:
- EMA activity is now highly bullish on shorter timeframe charts.
- Daily Parabolic SAR is signalling an uptrend could be shaping up.
- The recent rally seems to be maintaining momentum.
The EURCHF should extend its gains in the later part of this week, potentially seeing itself move as high as the 1.0824 mark. Technical forces are largely responsible for the gains seen so far and, as a result, they will be the primary focus moving ahead. However, it remains worthwhile to keep an eye on the fundamentals due later in the week as the impending figures carry somewhat more clout than those released on Monday and Tuesday.
First and foremost, as is shown on the four-hour chart, there is a demonstrable uptrend taking shape which has ostensibly ended the October-November decline. Confirming that we are, in fact, seeing a change in bias for the pair is the EMA activity as it has now moved above the 100 period average. What’s more, this particular average is on the verge of completing a bullish crossover with the 20 period average, much as it did with the 12 period EMA.
In addition to the EMA configuration, the change in trend is being signalled by the parabolic SAR readings as well. Whilst not shown, on both the four-hour and daily charts the trend detecting indicator is now firmly bullish. Moreover, the four-hour ADX oscillator is currently above the key 25.0 mark which signals that a relatively strong trend is now crystallising, much to the chagrin of the EURCHF bears.
Further adding to the body of evidence suggestive of more upsides moving forward comes from the Bollinger® Bands. As is clear on the above chart, the recent spate of gains has seen the pair push above the upper band. Typically, such a manoeuvre is indicative of some strong underlying buying pressure which could be enough to keep the EURCHF’s momentum going as the week continues.
From a fundamental perspective, there are a few key releases to keep an eye on as they could help or hinder the pair’s ascent. Firstly, the EU CPI data is due out shortly which could cap upside potential if it shows little improvement on last time. Conversely, the Swiss Retail Sales numbers are due in the subsequent session and are forecasted to contract by around 2.0%. This could exacerbate any gains made during the Wednesday session or, at least, offset any depressionary forces generated by weaker EU CPI outcomes.
Ultimately, the prognosis for the EURCHF is looking significantly better for at least the coming week or so. Whether the pair can sustain its momentum past this point is less clear however and will likely be tied more so to the fundamentals than the technical bias. However, for now at least, keep an eye on the pair as the bulls begin to throw their weight around in a bid to push the EURCHF higher.