FxNews – In today’s comprehensive EURCHF forecast, we will first scrutinize the current economic conditions in Swiss. Following that, we will meticulously delve into the details of the technical analysis pertaining to the EURCHF pair.
CHF Yet Steady
In October 2023, Switzerland’s primary economic indicator, the KOF economic barometer, exhibited remarkable stability, registering a marginal dip to 95.8 from September’s 95.9. This figure modestly surpassed the market expectations, which had been set at 95.0. The consistency in the barometer’s readings suggests a persistence of below-average economic trends for the 17th consecutive month.
Swiss businesses are navigating through a period marked by increased borrowing costs, which continue to exert pressure on the economic outlook. Despite these challenges, the slight uptick above forecasts provides a glimmer of cautious optimism.
The manufacturing sector in Switzerland is facing ongoing difficulties, with indicators pointing towards a continued downward trajectory. Conversely, there is a silver lining as the financial services and hospitality industries buck the trend, showing encouraging signs of positive momentum.
The EURCHF currency pair is currently showing signs that suggest a possible downward adjustment may be on the horizon. This insight comes from observing the 4-hour chart, where the pair has developed a distinctive long wick candlestick pattern right around the R1 resistance level, which is at 0.959. This pattern, coupled with the Relative Strength Index (RSI) lingering just below the overbought threshold and displaying divergence, points to a strong likelihood of the pair undergoing a correction. This would mean a retraction from its recent upward movement. If this correction occurs, we could see the EURCHF pair decline towards the pivot point, which is situated at 0.952.
It’s crucial to consider the resistance level, which is the upper boundary of the current bullish trend channel and is aligned with the R1 level. Should the price climb above this resistance, it would negate the bullish outlook. Moreover, a rise past the R1 mark would push the RSI into overbought territory, reinforcing the idea that the pair might be overextended. Given these indicators, it is advisable to refrain from initiating long positions at this time, as the market conditions seem to indicate that the pair is already overbought.
In the case of the EURCHF pair, the RSI divergence suggests that despite the recent price increases, the momentum is weakening, which could precede a price decline. Traders often look for these signals to make informed decisions about entering or exiting trades.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.