03 January 2012 at 4:16 GMT
The selloff continued in EURCHF last week with a sequence of 5 mildly negative daily performances being posted. But with levels trading close to the Oct low of 1.2125 and the 100 day average (1.2128), buyers emerged on Friday with the cross recapturing over half the initial daily net losses. This resulted in a Bullish Daily Hammer pattern being posted, a formation for trading often resulting in a change of investor sentiment from negative to outright positive. Although positive signals for sentiment are far from strong, this has resulted in the bias assessed to be mildly bullish going into this week and so our call is Bullish above 1.2105.
The immediate objective is 1.2245, the high from 22nd and 23rd Dec, with a move beyond that point targeting 1.2297, half the weekly net losses from 12th Dec, then towards 1.2398, 15 Dec high trade.
The risk to this call is that buying interest is weaker than currently assessed. This would be signalled by a move through 1.2105, a clear break of the 100 day average, with subsequent downside targeting 1.2075, then towards 1.2022, the 15 week low.
