The EURCHF has been stuck in a rectangular chart pattern for an extended period of time as visible in this D1 chart. This currency pair has now completed its correction from its horizontal resistance level and back down to its horizontal support level which is also enforced by its 200 DMA. We expect this currency pair to bounce of support and rally back into resistance.
MACD indicates momentum has improved which suggests that the current correction may be nearing its end. The histogram has gaped away from its moving average which remains in bullish territory and we expect the gap to close during the pending rally. RSI is trading in neutral territory and near oversold territory.
We recommend a long position at 1.2275 with a potential second entry level at 1.2150. We also recommend a stop sell order at 1.2200 in order to hedge the initial long position and before adding new positions to this trade.
Traders who wish to exit this trade at a loss are advised to place their stop loss level at 1.2150. We will not use a stop loss level and execute this trade as recommended. Place your take profit target at 1.2400.
Here are the reasons why we call the EURCHF currency pair higher
- The EURCHF currency pair has corrected from its horizontal resistance level back down to its horizontal support level which is enforced by its 200 DMA
- MACD indicates momentum is improving while the histogram has gaped away from its moving average which remains in bullish territory
- RSI is trading near oversold territory, but managed to stay above it during the correction
- Profit taking after a decent correction in order to realize trading profits
- New long positions by institutional swing traders
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