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FX Analysis

Chart of the week – EUR/CHF further potential downside amid Ukraine tensions

eurchf

Chart of the week – EUR/CHF 

EUR/CHF further potential downside amid Ukraine tensions

Short-term technical analysis

Time stamped: 13 Feb 2022 at 2:00pm SGT (click to enlarge chart)

Source: CMC Markets

  • The recent 2-weeks of +319 pips rally from 24 January 2022 low of 1.0300 to 7 February 2022 high has managed to stall and retreat from a significant resistance zone of 1.0620/1.0730.
  • The 1.0620/1.0730 resistance zone is defined by a downward sloping 50-week moving average (which indicates that the long-term impulsive down move sequence from April 2018 high of 1.2000 is likely to have been reasserted), the former swing low areas of 5 July 2020/15 August 2021 and the 50% Fibonacci retracement of the down move from 19 September 2021 high to 23 January 2022 low.
  • The 4-hour RSI oscillator has flashed a prior bearish divergence signal at its overbought zone on 11 February before it staged a bearish breakdown below its corresponding support at the 44% on 12 February 2022. Right now, it still has potential room to manoeuvre to the downside before it reaches an extreme overbought level of 19%. These observations indicate that short to medium-term downside momentum remains intact.
  • Watch the 1.0620 key medium-term pivotal resistance for a further potential drop towards the next supports at 1.0440 and 1.0370 in the first step. On the flipside, a 4-hour close above 1.0620 negates the bearish tone for a further squeeze up to test the upper limit of the significant resistance zone at 1.0730.


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