Although prices were hovering well above channel support in November, the upward sloping nature of the structure caught my attention. Whenever a channel forms with the trend rather than against it, it suggests exhaustion from whichever party is in control.
Since late February, the controlling party has been buyers. And for the past ten months, those EURCHF bulls have managed to push prices higher by more than 1,000 pips.
But that may be about to change. Monday’s 1.1609 close puts the pair at least ten pips below the key support area I mentioned over the weekend. It also confirms the break of the upward sloping flag that’s been developing since the August 18 low at 1.1258.
With that, we could see the pair slide lower over the next few sessions toward the next key support at 1.1500. The area capped several advances in mid-September and later served as a pivot between the 9th and 17th of October.
I should also point out that 1.1500 is the 50% retracement from the August lows at 1.1258 to the current 2017 high. A daily close below this area would expose the pattern’s inception point at 1.1260.
Alternatively, a daily close at 5 pm EST back above former channel support near 1.1630/40 would negate the bearish outlook.