EURCHF Ready to Roll Over?

·    November 8, 2018

·      November 8, 2018

·    November 8, 2018


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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

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It isn’t the prettiest head and shoulders pattern I’ve seen, but it could be one nonetheless.

I’m referring to the EURCHF price action since late last year. It isn’t very clear from the daily time frame, but the weekly illustrates it quite well.

As you can see from the chart below, we have a relatively aggressive uptrend that began in February of 2017. The bullish momentum started to falter in January 2018 which carved the left shoulder.

But buyers didn’t fall apart entirely until May of this year. That’s when the head of this structure began to form. And last but not least, the right shoulder developed throughout July.

You can see where EURCHF has tested former neckline support as new resistance. In fact, the pair formed a bearish engulfing week in the second half of October.

So where is EURCHF headed?

First, I want to be clear that there are never any guarantees. That said, if the measured objective is any indication, the euro cross could target the 1.0980 area over the coming weeks and months.

As you can see from the chart below, 1.0980 is also a key level. It’s capped several advances over the years starting in September 2015.

But before sellers can reach 1.0980, they’ll need to deal with the year-to-date low at 1.1180. Granted, that’s 250 pips below today’s price (which is a lot for EURCHF), so the market has plenty of room to run before then.

Now, here’s the most critical piece of this commentary…

The 1.1480 resistance area must hold on a weekly closing basis. If buyers take out the high of that engulfing week at 1.1500, there isn’t much chance we’ll see 1.0980 or even 1.1180 anytime soon.

Last but not least, remember that this is a Swiss franc cross. That means expect mostly choppy price action, bouts of volatility and sideways movement that can last days or even weeks. If you’re okay with all that, EURCHF could be a profitable play on euro weakness.

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EURCHF weekly head and shoulders


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21  Comments

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  1. Thank you Justin. I have this pair on my radar due to the engulfing candle that it formed. I also put a small sell entry on this one. But I did not notice the H & S pattern. Thank you for enlighting me. I hope that this plays well.

      1. If this one roll Justin, do you think it will be ideal for pyramiding? Also, how much do you normally put your trailstop if you don’t mind me asking? 80pips 100 pips?

  2. 3x rest at 1.14700? i have been thinking of short on this pair also. 1.13400 could be a short term target also??

  3. Thank you Justin for the brilliant analysis. I try my best to mark every analysis just as you’ve marked them. Thanks a lot.

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