The USD/CHF pair is one that I don’t talk about much these days, simply because it really hasn’t done much. However, when you look at the monthly chart one thing starts to standout right away: it appears that we are starting to come dangerously close to a significant downtrend line. The 0.90 level, or the vicinity I should say, has certainly offered quite a bit of support. I begin to wonder now whether or not the Swiss National Bank is in behind this?
This isn’t as far-fetched as it may sound. After all, they have been heavily involved in the Forex markets over the last several years, and although they haven’t specifically named the US dollar as a concerned, certainly the massive selloff in the value of the US dollar is something that they don’t necessarily want to see. Granted, they are more apt to be involved in the EUR/CHF pair, but this pair is probably almost as important when it comes to global trade.
0.88 appears to be very important.
I believe that the 0.88 level is essentially the “floor” in this market. What’s truly important about this is that we are so close to it. It is because of this that I would be heavily short this particular market if we get below there. The one driving thing that could put is below there rather quickly would be the EUR/USD pair. Remember, this pair typically runs counter to what that pairs doing. If it breaks out above the 1.38 handle, this market could fall apart. It will be interesting to see what the Swiss do about this, but remember that central banks work on their own timeframe, and as a result you normally have quite a bit of time to place trades before they do anything.
When you look back at the beginning of 2011, you see an absolutely beautiful hammer on this monthly chart. We shot straight up and that was when the Swiss National Bank was involved in devaluing the Swiss franc. However, you can see that after that initial move, we’ve gone nowhere. This to me suggests that the SNB has probably been behind the scenes protecting this general vicinity. Even if they have not been, this pair simply cannot find traction. I think it goes lower, it’s just a matter of time.
