EURCHF Enters Overbought State in the Premium Zone

Market Analysis: EURCHF Sets for a Major Pullback to the Downside

EURCHF enters an overbought state in the premium zone. Amidst prevailing bullish sentiment in the market, the price sets for a potential major pullback to the downside. According to the MA Cross, the market is clearly in a bullish trend. However, despite sporadic attempts by the bulls to maintain the bullish order flow, the overarching trend suggests a possibility of a downward pullback.

EURCHF Key Zones

Resistance Zones: 0.98200, 1.00970
Support Zones: 0.94540, 0.92540
Following the formation of the double top in November 2023, EURCHF experienced a massive crash into the discount zone. According to the Stochastic Oscillator, EURCHF remained in an oversold state for a long time. The bears remained completely in control despite the indication of the Stochastic Oscillator. However, a massive expansion from the discount zone occurred as a result of the overwhelming buying pressure at the 0.92540 support zone.
 
The bullish moves were propelled by price action towards a bullish order block in the discount zone. EURCHF continued in an upward direction until the invalidation of the double top that formed in November 2023. Apparently, the bullish moves began as the year 2024 began, indicating a high chance for a bullish market, at least for the first quarter of the year. As suggested by the Stochastic Oscillator, the market is now in an overbought state. A major pullback is highly probable; however, the overall order flow remains bullish.

Market Expectation

In the short-term frame, the market seems to be in a redistribution phase. The Stochastic Oscillator on the four-hour chart also indicates that the market is now overbought. Following the completion of the redistribution phase, EURCHF is expected to experience a notable decline beyond the previous low of 0.97010.

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