Hello traders! Let’s have a look at the EUR/CHF currency pair, where we see a strong ongoing downtrend. The thing is, that there are no signs of trend reversal, in fact, price action says that the downtrend is likely to continue.
On a 4 hour timeframe, EUR/CHF recently broke below the lower trendline of the descending channel, which shows bear domination in the market. Currently, pair is trading at the previous area of support, which is now acting as the resistance (1.0580-1.0600). This could be the supply area, from where price might continue to move lower.
On the 1 hour chart, the downtrend trendline has been rejected along with the 200 Exponential Moving Average. Price continues to print lower lows and lower highs, which is yet again a confirmation of the downtrend validity. As long as the price is below 1.0700 psychological resistance we can expect a substantial decline. First support is seen at 161.8% Fibonacci retracement level applied to the corrective wave up, after channel breakout. Second and perhaps the final target could be at 1.0383, which is 261.8% Fibonacci retracement level. Potentially this makes it nearly 200 pip drop, which can occur anytime next week.
Bias: Bearish while below 1.0700
Potential Resistance Zone: 1.0650 – 1.0700
Potential Targets: 1.0507, 1.0383
Have a profitable trading!