By: Doug Rosen
As always I begin my analysis on this pair looking at both the EUR/CHF and GBP/CHF. The reason I do this is to determine the relative strength between the EUR and GBP. This is the foundation of my analysis for even the major pairs such as the EUR/USD and the GBP/USD. We want to know a couple things when planning trades. Which pair will we trade and in which direction. I refer to this as reverse engineering of the currencies. I need to know which is strong and which is weak, so that I can pair a strong currency with a weak currency. I use the CHF as a proxy to make this determination. Which is stronger, the EUR or GBP? Which is stronger, the USD or the JPY. If the EUR is stronger than the GBP and the USD is weaker than the JPY then I want to long the EUR/USD. With all that being said I shall move on.
As I view the weekly chart for the EUR/CHF I see that last week was a red weekly candle. I see the new weekly candle, even though it is still early in the week, it is red and as I look at the daily chart the last several candles have been red and Stochastics has been falling and the 5 ema is falling on the 13 ema and prepping to cross below it. At this moment it appears the EUR is weakening against the CHF. This could be short lived since we are approaching an ascending trend line and a 21 ema but at the moment the EUR is weaker than the CHF. This bearish attitude also applies to the 4 hour chart and on the 1 hour we are in a range yet this seems like a bearish range and the same applies to the 15 minute chart. Now, moving on to the GBP/CHF weekly and daily chart I see the opposite of the EUR/CHF. The GBP seems to be slightly stronger on the weekly and the daily charts. We must however note that price on the weekly is approaching a descending trend line as well as a 55 ema and the upper Bollinger Band closing in but at this very moment the GBP is stronger than the CHF on the daily and weekly charts.
On the 4 hour price is riding the 5 ema but is fighting a bit with the monthly R1 at the time I am writing this analysis. Hourly chart also seems bullish and just fibbed shy of the 38.2 of the recent swing up with a boost from the hourly 21 ema. The same applies with the 15 minute chart, we just bounced off of a 55 ema but fighting a bit with yesterdays high. In any case, the GBP is stronger than the CHF. So now, if we look at the EUR/GBP we will expect a bearish pair.
Looking at the weekly chart of the EUR/GBP it is very obvious we have busted out of an apex, or a price trap (whichever you want to call it) but we are reacting a bit off the weekly 144 ema, however the lower Bollinger band is open and pointing down.
On the daily chart the break is more obvious, yet the lower Bollinger Band needs to open and the 5 ema must catch up with price so some hesitation or consolidation or even a small retracement may be in the works.
On the 4 hour chart we are gracefully riding down the 5 ema as well as with the 1 hour chart. The 15 minute chart is in consolidation but I think continued price action to the downside is imminent. Keep an eye on the daily 5 ema since price and the 5 ema are gapped and price and the 5 ema need to connect for this downtrend to continue. In any case, at this time, the GBP seems to be the stronger currency compared to the EUR and the CHF.