The ascending engulfing candlestick could indicate several advantages

• EUR/CHF bottomed and formed a Bullish Engulfing candlestick pattern on September 11th.
• It has since recovered, then retired – it could soon be back on top.

EUR/CHF hit a temporary low on September 11th and recovered. It is currently trading above 0.9400. There are signs that it could continue higher, despite the overall bearish trend in the medium term.

EUR/CHF daily chart

EUR/CHF formed a Bullish Engulfing Japanese candlestick pattern when it bottomed on September 11th. This occurs when the price drops, recovers, and during the recovery day closes – or “swallows” – the entire previous day’s body into the previous day’s body. The initial engulfing candle was followed by a green confirmation day (shaded rectangle) that added confidence. This pattern is an optimistic short-term signal.

The pair has pulled back slightly since reaching the peak on September 12, however, the correction has been shallow so far and the pair is likely to resume a move higher.

A break above the high of 0.9434 (September 12) would confirm a higher continuation, with the next target at 0.9464, followed by 0.9513 in case of a particularly bullish move.

A break below 0.9369 would invalidate the bullish assumption and suggest a more neutral or bearish outlook.