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EUR/CHF – The Swiss Franc Lowers its Guard against the Euro Trooper

Let’s address the $EUR/CHF pair from a dynamic technical analysis viewpoint with a multiple time frame approach.
It may look a bit complex and somewhat too technical for the layman but with some explanations it will become very clear.
The graph presented is on a closing basis from Thursday, August 17 2017; by the time of publishing the EUR/CHF pair is rallying into the 1.135 area)

Monthly time frame

We oberve two successive plateaus of minimum volatility (highlighted in yellow).
The first one induced a breakdown and a so-called volatility bubble (as per the shape of the volatility envelop that formed) below the 1.20 floor that had been defended for too long by the Swiss National Bank.
It is well known that when a bubble forms it is typically followed by another volatility event in either the same or in the opposite direction.
In the present case the latest volatility plateau resulted in a (bullish) breakout, which appears to attempt countering the previous bearish bubble with now rising prices.
The breakout is accompanied by positive signals (circled crossover of the moving averages + positive MADC signal).
It should also be highlighted that following the breakout the price came back testing the former resistance (red color line) now turned  support (this is called an ‘Inversion of Polarity’ event).

Quarterly Time Frame

There is a major bullish divergence between prices and the MACD (green line) hinting to price recovery targeting the opposite boundary of the volatility envelop (green arrow).
The long lower spikes below the green line drawn on the price screen is indicative of buying power, and the two successive doji morning stars are a sign of decisive bullish strength.
The price is struggling with the moving average but this obstacle should not hold for too long and be possibly overcome before year’s end.

Yearly Time Frame

The trend is still bearish but the prices are very far away from the moving average, the volatility envelop is widely spread out, and the RSI (9) is heavily oversold.
The crossover between the Parabolic indicator and the moving average is a good predictor of a corrective price movement approaching.
It is also worth noticing the forming of a doji morning star that perfectly replicates a similar pattern on the quarterly time frame.
We should expect the price to get rid of the red moving average (7-period), which should soon turn from resistance into support.


The #EUR/CHF pair is pointing higher and long positions can be initiated with 1.20 as an initial target and 1.30 as a second objective.
This bullish scenario will remain valid as long as 1.09 is preserved on a quarterly closing basis.

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