EUR/CHF's dipped sharply to 1.2168 initial last week but turned sideway since then. Initial bias is neutral this week for some sideway trading. But over all outlook is unchanged. Fall from 1.2390 is viewed as the third leg of the correction pattern from 1.2568 and deeper fall is expected. Below 1.2168 will target 1.2118 and below. Though, strong support is expected above SNB's 1.2 floor to contain downside and bring rebound. Meanwhile, decisive break of 1.2390 resistance is now needed to indicate underlying momentum. Otherwise, outlook will stay neutral in near term.
In the bigger picture, outlook is a bit mixed for the moment. The fall from 1.2568 to 1.2118 was much deeper than expected but it's corrective looking. We'd still favor more upside in the cross after last week's development, to 38.2% retracement of 1.6827 to 1.0061 at 1.2646. But, would prefer to see sustained break of 1.2390 resistance to give us more confidence on this view.
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