EURCHF Tries to Cover Yesterday Losses

Yesterday was an important day for the Euro. It had an interest rate decision that resulted in no changes, and a press conference from the European Central Bank (ECB). The day ended with the Euro declining, which means that traders saw the ECB’s comments and action as dovish. Friday brings us a correction on pairs with the Euro, all apart from the EURUSD, because of the significant strength of the American currency.

In today’s analysis, we’re taking a look at a very interesting situation on the EURCHF, where the price created a nice Inverse Head and Shoulders pattern. It was mid-October when the price broke the neckline of this formation (red), giving us a legitimate buy signal. Currently, the price is close to an important horizontal resistance on the 0.997 (blue). Interestingly, the current bullish correction is almost the same as the one from March-May (in terms of the ~550 pips depth). This may not be the strongest indicator but it’s definitely something interesting to look at.

As long as we stay below the 0.997 resistance, the sentiment is negative, but the price closing a day above that will bring us a proper, long-term buy signal. Chances for that happening are quite significant because we’ve been seeing the Euro behave properly over the past several days.