EUR/CHF Technical Analysis: Recovery rally from 21-month lows could soon gather pace

EUR/CHF is currently trading at 1.1189, having hit a 21-month low of 1.1162 on Friday.

The recovery rally from the lowest level since July 2017 could soon gather pace with a convincing move above 1.12, according to the 4-hour bullish divergence of the 4-hour chart relative strength index (RSI).

The case for recovery looks stronger if we take into account the oversold reading on the 14-day relative strength index (RSI) and the back-to-back inverted hammer candles - a sign of seller exhaustion.

While a break above 1.12 looks likely, big gains, if any, could be short-lived, while the 10-day moving average (MA) is trending south. As of writing, that average is located at 1.1232.

4-hour chart

Daily chart

Trend: Oversold bounce