EUR/CHF drops to 7-day low at 1.0850, remains capped at 200-DMA

Following last week's yet another failed attempt to move back above the very important 200-day SMA, safe-haven demand boosted the Swiss Franc across the board and dragged the EUR/CHF cross back below 1.0900 level to currently trade around mid-1.0800s.

Following the historic Brexit referendum, the cross has been oscillating within a broader trading range and has repeatedly failed to hold on to its strength above 1.0900 handle, forming a descending trend-line. The pair, however, has been finding some buying interest around 1.0800 horizontal zone. 

This combination of descending trend-line resistance and horizontal support now seems to constitute towards a bearish descending triangular formation, which would be confirmed once the pair sustains its weakness below 1.0800-1.0790 strong horizontal support.

Technical levels to watch

On a sustained weakness below 1.0850 level, the pair seems to continue drifting towards 1.0800-1.0790 strong horizontal support with 1.0825 acting as intermediate support, which if broken is likely to turn the pair vulnerable and open room for continuation of the pair's downward trajectory in the near-term.

On the flip side, recovery momentum back above 1.0880 immediate resistance is likely to assist the pair back beyond 1.0900 handle, towards retesting the very important 200-day SMA strong resistance near 1.0920 region.