EUR/CHF Nears Critical Breakout as Head and Shoulders Pattern Forms

In today’s technical analysis, let’s take a closer look at the EUR/CHF pair, where it seems we’re nearing the end of a bullish correction. The Euro to Swiss Franc pair is currently forming a head and shoulders pattern, a key development as it appears at the end of a wedge pattern marked in green. The wedge itself represents a bullish correction within a larger downtrend, while the head and shoulders pattern, marked in yellow, signals the potential end of this corrective phase.

At the moment, the price is in a critical battle, testing the neckline of the head and shoulders formation. A decisive break below this neckline, specifically a daily close beneath the red area, would serve as a strong signal to go short, indicating a possible continuation of the larger downtrend. Conversely, if the price bounces off this neckline, it would invalidate the head and shoulders pattern and could lead to a strong buy signal, suggesting a resurgence of bullish momentum.

While both scenarios are possible, the current market conditions suggest that a breakout to the downside might be slightly more probable. However, it’s crucial to keep an eye on how the price behaves around this neckline to confirm the next move.

Source: https://www.axiory.com/analytics/technical-analysis/eur-chf-nears-critical-breakout-as-head-and-should