Range within range and break, EUR/CHF study
Updated
An exercise of slope analysis on EUR/CHF, one of the pairs believed to be most suited for range trading (but beware of the Bank of Switzerland interventions!). A year long wide uptrending channel has formed which has certainly given a few entry opportunities. However, what I find interesting is the tendency that price had to form relatively tidy descending triangles following a rally from the bottom of the channel. These triangular formations have been regularly broken to the upside with considerable follow-through. Recently, we have seen a certain tapering of the main channel with a rally from the midline (instead of the bottom) and subsequent break to the upside and formation of a smaller uptrending channel.
These ranges lure us in with their promise of predictability and order... but how long can they last?
The most recent price action seems to suggest a short term bearish development that could see another touch and test of the channel's bottom. Could that be an opportunity for a break-out to the downside? The target of such a move could be as low as a juicy ~1.055 (fibo extension target).
These things need strong fundamentals though, and such a break-out picture should go together with a major risk-off move, maybe coupled with a hard blow to the European Union... One imminent high risk event comes to mind... (I personally hope that doesn't happen!).
The flip side of that would see a continuation of the comfortable, predictable, boring channel.
These ranges lure us in with their promise of predictability and order... but how long can they last?
The most recent price action seems to suggest a short term bearish development that could see another touch and test of the channel's bottom. Could that be an opportunity for a break-out to the downside? The target of such a move could be as low as a juicy ~1.055 (fibo extension target).
These things need strong fundamentals though, and such a break-out picture should go together with a major risk-off move, maybe coupled with a hard blow to the European Union... One imminent high risk event comes to mind... (I personally hope that doesn't happen!).
The flip side of that would see a continuation of the comfortable, predictable, boring channel.
Note
Seems to be moving according to forecast, let's observe the testing of the support trendlineNote
testing the support trendline
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.