Euro optimism has been growing for Greek to receive a bailout to help them make their June 30th deadline for global creditors. The euro has rallied strongly against the U.S. dollar and the commodity currencies, but not so much to the pound and franc.
Early in Asia, EUR/CHF continued to consolidate between the 100- and 200-period SMA on the 240-minute chart. Even if a deal is reached and the currency briefly rallies, the euro longer-term bearish outlook might continue to drive the currency pair down. The next major move will be triggered possibly by Chinese and the U.S. economic outlooks. If the U.S. recovery continue to drives the global recovery, we could see a major drop for the euro.
The EUR/CHF chart shows that if the downward slide resumes, major support may come from the 1.0320 – 1.0350 zone. It is around that area that both a bullish butterfly and Gartley pattern. Point D of the Gartley pattern is confirmed by the 1.0340 support level, while Point D of the butterfly pattern is targeted by either the 1.0350 or 1.0320 areas
The trade: Sell EURCHF at 1.0460 with a stop loss at 1.0510 and a take profit at 1.0360. The Risk/Reward Ratio is around 1: 2
Edward J. Moya
WorldWideMarkets Online Trading