EUR/CHF traded lower during the European morning Thursday, after it hit resistance near 1.1375, slightly below the upper bound of the downside channel that’s been containing the price action since February 12th. After rallying and hitting that bound on Monday, the pair has been trading in an indecisive manner, suggesting that traders may not be willing yet to exit the channel. Thus, given the rejection from near the channel’s upper end, we see the case for some further declines, at least in the short run.
A decisive move below the 1.1348 zone, defined by Tuesday’s low may initially pave the way to the 1.1334 barrier, defined by the inside swing high of March 8th. If the bears are willing to stay in the driver’s seat, then a break below 1.1334 could carry larger downside extensions, perhaps towards Monday’s low of 1.1315, or the 1.1308 level, defined by the low of March 8th.
Taking a look at our short-term oscillators, we see that the RSI continued drifting lower and just touched its toe below its equilibrium 50 line, while the MACD, although positive, lies below its trigger line and points south as well. These indicators suggest that the rate has lost its upside speed and that negative momentum may start building up soon, which is in line with our view for some further declines, at least within the aforementioned channel.
On the upside, we would like to see a clear break above 1.1387 before we start examining whether the bulls have gained the upper hand. Such a move could confirm the break above the upper end of the channel and may initially open the path towards the 1.1407 territory, marked by the highs of February 12th and 13th. Another break, above 1.1407, could allow the bulls to put the 1.1420 or the 1.1429 levels on their radars.
