By: Doug Rosen
Well, as it turns out, the descending trend line for the EUR/CHF weekly chart I spoke about yesterday in my analysis did not break. That does not mean it will not break, just means there was a reaction and a bounce line that has already been tested three times is not uncommon and in fact, expected. Price still maintains strong momentum and high speed and a fall back to the weekly 5 ema is all it may take to send price charging back up through that trend line. On the daily chart for the EUR/CHF we also have an ascending trend line that just may act as support, and just below the daily price action we happen to have a 233 and 13 ema that may add to support and cause a bounce through the descending trend line. In any case, I still cannot ignore the fact that in both the weekly and the daily the stochastics is in fact in the overbought zone, poised to cross to the downside. Looking at the GBP/CHF chart it is obvious that it's weekly descending trend line did get poked a bit then slapped price back down to the weekly 5 ema where we will have to see if that weekly 5 gives price a boost up. I also want to mention before I forget that the weekly stochastics for this pair is also in the overbought zone. Now, looking at the daily chart, just as with the EUR/CHF daily the GBP/CHF daily chart also has an ascending trend line that could act as support and send price back up and we have a 233 ema as well as a 21 ema acting as additional support. Also note, the daily stochastics is also in the overbought zone crossing down back into the trade zone. Just so you all know, these trend line breaks can be very significant and as I have said over and over, the EUR/CHF and the GBP/CHF hold a lot of significance tot eh EUR/GBP since I use the CHF as a base line and it is easier for me to determine which currency is stronger, the EUR or the GBP based on how they hold up against the CHF. The GBP appears to have fallen harder against the CHF than the EUR has so at this point I am leaning towards EUR strength. Moving onward to the EUR/GBP it is obvious that the EUR is stronger than the GBP. Price is however, heading up to a descending trend line which may add to resistance and force price back down adding to GBP strength. On the daily chart the last defense before price hits the descending trend line is a 144 ema. If it holds and price bounces off, could give the GBP strength, but if it breaks, the EUR will get very strong. 
Looking at the 4 hour chart for this pair it looks extremely bullish, the 5 ema is crossing above the 233 and the upper Bollinger Band is wide open pointing straight up but we are 25 pips away from last months high which may also act as strong resistance. 0.8734 is also last week's high so we are approaching fight territory. Price is riding the 5 ema however, and we are getting what is referred to as a 'stochastic pop' which is something I will explain in a future lesson. The buildup of speed and momentum could force price through resistance, hence cause a breakout and make the EUR very strong. Watch for a break above 0.8734 then a break above 0.8751 at which point I would say a EUR/GBP breakout to the upside is occurring.
