The EURCHF monthly candle will close in a few hours, is there a possibility of a correction?
2021 is a tough time for EURCHF. This pair had plunged more than 750 pips from its highest to its lowest point since the 2nd quarter of last year. The euro is indeed being 'threatened' due to the recent heated political situation between Ukraine and Russia. Even Ukrainian civilians have been trained to use weapons and tactical strategies in anticipation of a Russian invasion. If a war does occur, the value of the Euro could fall even further in the future.
Quick Recap on EUR/CHF
In general, EURCHF appears bearish, especially since the second quarter of last year. However, with the 'fresh wind' that this pair will close bullish on the monthly timeframe, will there be a chance for EURCHF to rise, at least to the monthly key level?
Let's dive in a little deeper to see how EURCHF fare on multiple timeframes:
EUR/CHF Monthly Technical Analysis
The EURCHF monthly timeframe shows a very clear bearish sentiment, especially when last November the pair broke the strong support around 1.05500. Last December's candle closed bearish with a smaller body candle, indicating a smaller bearish volume and in January this time, EURCHF had crossed the upper and lower limits of the December candle. It even seems to be closing bullish soon. If closed bullish, there will be an opportunity for EURCHF to retest to the key level 1.05500.
EUR/CHF Weekly Technical Analysis
On a weekly basis, EURCHF is seen ranging between 1.045 as resistance and 1.033 as support. Last week's candle also closed bullish, indicating a valid support area. At the beginning of this week, it seems that EURCHF will wickfill towards last week's high around 1.0400 and then if it is broken, will aim for 1.045 as weekly resistance.
EUR/CHF Daily Technical Analysis
On the daily timeframe, EURCHF has posted gains over the last few days. Plus the rising star pattern that is formed provides a reversal signal for this pair. Last Friday's candle which closed bullish at the same time indicated the daily support that was formed at the area of 1.03700.
Trading idea for EUR/CHF
On H4, EURCHF is still in a ranging area which if it can break the resistance at 1.04, there is a possibility that the pair will continue its bullish movement.
Order: Buy Stop
Entry: 1.04000
Stop Loss: 1.03650
Target 1: 1.04200 (50% + BE)
Target 2: 1.04500 (25%)
Target 3: 1.05000 (25%)
Total risk: Max 1% Equity (High Risk Setup)
Reason: Bullish sentiment on daily timeframe & clean traffic.
EURCHF which is in a bearish trend as a whole needs a retest to go back down deeper. Political issues between Ukraine and Russia have further added to the burden on the euro to recover quickly after being hit by the Covid-19 outbreak a few months ago. If a war between Ukraine and Russia is going to happen, we will see the value of the EURCHF fall further and further in the future. But in the short term, there is still a possibility for EURCHF to go up, retest to the long term key level or just take liquidity to go back down.