EURCHF Respects Volume Imbalance

EURCHF stalls after hitting a significant volume imbalance on the daily chart. This forms a swing high, indicating a potential retracement in the market.

Key Levels

Demand Levels: 0.9340, 0.9220, 0.9000
Supply Levels: 0.9580, 0.9770, 0.9940

EURCHF Long-term Trend: Bearish

The Stochastic indicator signalled an oversold condition at the beginning of the month, which led to a price test of the crucial support level at 0.9220. This support level played a pivotal role in initiating a retracement, enabling the price to gradually move above the Moving Average period 9 and reveal a bullish pullback. However, the price encountered a volume imbalance at 0.9410, which acted as a magnet to engineer efficiency.

A volume imbalance formed at 0.9410 during the impulsive descent of the price to the support level of 0.9220. This intersection of wicks without a body characterises the imbalance, denoting inefficiency in the market. The volume imbalance has attracted the price, aiming to achieve efficiency and potentially leading to a reversal.

EURCHF Short-term Trend: Bearish

In the higher timeframe, the price is overbought, which has resulted in a bearish shift in the lower timeframe. Although the price still has the potential to rise above the volume gap, a bearish order block lies just above, which could cap the upside. Notably, the Moving Average already dominates the price on the higher timeframe, showcasing bearish momentum. As the price is about to dip below the Moving Average period 9 on the higher timeframe, traders can utilize the lower timeframe structure as an early entry point to ride the bearish resumption direction.