Preparing for the ECB meeting
The chairman of Swiss National Bank (SNB), Thomas Jordan, said that the UK’s exit from the European Union without signing an agreement could damage the Swiss economy.The quotations of EURCHF will grow or not?
Such movement indicates the strengthening of the euro against Swiss franc. According to Thomas Jordan, Brexit without a contract can increase the volatility of the global foreign exchange market and damage global trade. In order to minimize external threats, the SNB can take measures to further mitigate its monetary policy. We can underline that its rate is the lowest in the world and accounts minus 0.75%. Significant macroeconomic data in Switzerland will be released only on January 29 - it will indicate the trade balance for December last year. The euro-dollar rate dropped last week due to weak data on Germany’s GDP growth in 2018 by + 1.5%. This is the most modest increase in the last 5 years. This week on Thursday, January 24, the next ECB meeting will be held. Theoretically, its representatives can make any statements in support of the single currency rate.
On the daily timeframe EURCHF: D1 broke up the downtrend resistance line and adjusted upward. A number of indicators of technical analysis formed signals for uptrend. Further growth of quotations is possible in case of positive news in the EU .
- The Parabolic indicatorgives a bullish signal.
- The Bollinger bands have narrowed, which indicates low volatility. Both Bollinger bands are titled upward
- The RSI indicatoris above 50. It has formed a weak divergence to increase.
- The MACD indicator gives a bullish signal.
We do not exclude a bullish movement if EURCHF exceeds the last two upper fractals and the upper Bollinger line: 1.135. This level may serve as an entry point. The initial stop lose level may be placed below the last two lower fractals, the Parabolic signal and the lower Bollinger line: 1.118. After opening a pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals Thus, we are changing the potential profit / loss ratio to our advantage. After making a deal, more risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price overcomes the stop level (1,118) without reaching the order (1,135), we recommend to close the position: the market sustains internal changes that were not taken into consideration.
Summary of technical analysis
| Position | Buy |
| Buy stop | Above 1,135 |
| Stop loss | Below 1,118 |