EURCHF Inches Closer to a Breakout

[B]My picks:[/B] Pending EURCHF Breakout (Bullish Bias)
[B]Expertise:[/B] Combining Money Management with Fundamental and Technical Analysis
[B]Average Time Frame of Trades:[/B] 3 days - 1 week

Last week; establishing a position in any euro pair was inviting in risk. Already suffering from volatility and lacking any sense of formal direction. EURGBP would falter on its tentative bearish break below 0.8650 and subsequently rebound to come back into conflict with a larger range. A dense wave of scheduled and unscheduled event risk would ultimately overwhelm this position. Bolstering activity and sabotaging direction were rate decisions from both the ECB and BoE; GDP numbers; rumors that UK Prime Minister was set to resign; and a round of second teir data. This pair may still breakout; but momentum is critical ingredient that is still missing from this equation.

Looking across the other euro-based pairs, there are still opportunities to be had. However, I will not attempt breakouts or strong trends as there is a notable lack of event risk or dominate fundamental themes to drive a true advance or decline. While there are opportunities out there to take advantage of significant swings (like with EURUSD); the drive itself is questionable and therefore the likelihood of an unfavorable reversal is too great. Therefore, I will defer to a pair that has clearly established its intentions towards congestion; but is closer to a true breakout than any of its other, more volatile counterparts. Looking to technicals, this chop has been the pace this pair has choosen for nearly three months (since the SNB announced its intentions to intervene on behalf of the stifling franc). A steadily descending trendline from August is now coinciding with the 200-day SMA and 50% retracement of the Dec. 15 to Mar. 6 swing low to hold back modest attempts at advance for a triple top at 1.5225. I will use this level for entry on a long position should there be a 240-minute candle close above it or spot hit 1.5260. However, if momentum doesn’t supply at least 50 points of follow through after two active sessions, I will cut the position as we would have merely expanded the congestion zone rather than produced the next leg of an evolving trend. Ultimately, I don’t want to have an inherent bias on this pair - as the unusual fundamental and technical circumstances could play out in either direction - so I will follow similar rules with a close below 1.50 or should spot hit 1.4950 for a short-side entry.