{"id":120553,"date":"2018-01-29T08:50:33","date_gmt":"2018-01-29T13:50:33","guid":{"rendered":"http:\/\/countingpips.com\/?p=120553"},"modified":"2018-06-01T15:43:48","modified_gmt":"2018-06-01T15:43:48","slug":"short-term-trading-idea-fx-eurchf-looking-down-correction-to-the-38-2-fibonacci-level-at-1-1372","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2018\/01\/short-term-trading-idea-fx-eurchf-looking-down-correction-to-the-38-2-fibonacci-level-at-1-1372\/","title":{"rendered":"Short-term trading idea FX EURCHF – looking down: correction to the 38.2% Fibonacci level at 1.1372"},"content":{"rendered":"
January 29, 2018<\/div>
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By Gabriel Ojimadu, Alpari<\/strong><\/p>\n

Trading opportunities on the currency pair:\u00a0<\/em><\/strong>since the euro\u2019s collapse in 2015, it\u2019s been trading within the boundaries of the 3-year B-B channel. Considering that the upwards impulse is running out of steam, my forecast is projecting an exit from the C-C channel and a decline to 1.1372. I\u2019m expecting a downwards correction amounting to 38.2% of the upwards movement from 1.0625 to 1.1833.<\/p>\n

Current situation<\/em><\/strong><\/p>\n

I haven\u2019t done an idea on a cross with the franc since January 2015, when the Swiss franc jumped sharply against all other currencies. On the 15th<\/sup>\u00a0of January, 2017, the Swiss National Bank (SNB) took everyone by surprise when they declined to protect the exchange rate against the euro at 1.20 and lowered the deposit rate to -0.75%.<\/p>\n

A lower limit was set for this cross pair in September 2011 in order to protect against deflation and to strengthen the position of Swiss exporters. For several years, the regulator intervened when necessary to keep the exchange rate above 1.20. There was no limit on the number of times the bank could intervene, which was good news for speculators, who would earn from buying euros as the rate approached 1.20.<\/p>\n

After the SNB\u2019s abandonment of the euro cap, the EURCHF rate dropped by 19.6% to 0.9651. 3 years later, the rate has nearly returned to 1.20, marking a 22.6% increase to 1.1833.<\/p>

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Fig 1. EURCHF monthly chart. Source: TradingView<\/p>\n

I\u2019ve included the monthly chart on this instrument so that you can see the franc\u2019s upwards trajectory since the beginning of 2015.<\/p>\n

The pair is trading within the 3-year upwards B-B channel, which is embedded within the 6-year A-A channel. There\u2019s a resistance zone between levels 1.1877 and 1.2050. The annotations from the monthly chart are also present on the weekly chart below.<\/p>\n

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Fig 2. EURCHF weekly chart. Source: TradingView<\/p>\n

Since the end of February 2017, the EURCHF pair has been in an uptrend. We can see from the chart that since August last year, this trend had slowed down. Last week, buyers encountered a resistance level at 1.2833. The exchange rate declined by 1.61% to reach 1.1601 over the course of the week.<\/p>\n

Traders opened long positions of the franc, ignoring comments by the SNB\u2019s chairman, Thomas Jordan, who announced that the central bank would intervene in the market if necessary. The franc, along with the yen and gold, became safe haven assets in the wake of the dollar\u2019s collapse last week. This decline was initially triggered by the US government shutdown and intensified by US Finance Minister Mnuchin\u2019s comments that a weak dollar was good for the US.<\/p>\n

Taking into account the fact that the upwards trend has slowed down; I expect to the pair exit the C-C channel and drop to 1.1372. Sellers are in control for the time being. I don\u2019t see the trend being broken, though, at least no further than the 38.2% correction of the upwards movement from 1.0625 to 1.1833. If the correction amounts to 61.8% after exiting the C-C channel, our target will drop.<\/p>\n

Source: “Short-term trading idea FX EURCHF – looking down: correction to the 38.2% Fibonacci level at 1.1372<\/a>“<\/div>\n","protected":false},"excerpt":{"rendered":"

By Gabriel Ojimadu, Alpari Trading opportunities on the currency pair:\u00a0since the euro\u2019s collapse in 2015, it\u2019s been trading within the boundaries of the 3-year B-B channel. Considering that the upwards impulse is running out of steam, my forecast is projecting an exit from the C-C channel and a decline to 1.1372. I\u2019m expecting a downwards […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-120553","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/120553","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=120553"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/120553\/revisions"}],"predecessor-version":[{"id":120555,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/120553\/revisions\/120555"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=120553"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=120553"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=120553"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}