The EURCHF has launched a strong rally from its multi-week lows as visible in this H4 chart. This currency pair has launched a bump-and-run reversal pattern with the latest candlestick pattern formed indicates a potential capitulation spike higher. We call this pair for a correction back down to its 200 DMA, before a potential bigger upturn may be attempted.
MACD has indicated strong bullish momentum, but RSI is trading in extreme overbought territory at very unsustainable levels. A pullback down to its 200 DMA would confirm a bigger rally after testing support levels.
We recommend a short position at 1.2315 with a second entry level at 1.2515. We also recommend a stop buy order at 1.2415 in order to hedge the first short position.
Traders who wish to exit this trade at a loss are advised to place their stop loss order at 1.2415. We will not use a stop loss order and execute this trade as recommended. Place your take profit level at 1.2215.
Here are the reasons we call the EURCHF currency pair lower
- EURCHF has formed a bump-and-run reversal pattern
- Latest candlestick indicates potential capitulation spike
- RSI trades in extreme overbought territory at unsustainable levels
- A pullback is required in order to maintain the uptrend
- Profit taking
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