The EUR/CHF pair initially broke higher during the course of the session on Tuesday, but ran into a bit of resistance at the 1.03 level. That being the case, we ended up turning back around and forming a shooting star of sorts. I believe that the trend is intact, and the EUR/CHF pair will of course continue to fall from here. As the Swiss National Bank killed the currency peg, the pair is now free to go much lower and reflect true value. The fact that we cannot keep gains for any real length of time tells me that we will continue to fall. I believe this move is indicative of a return to the lows, which is essentially the 0.97 handle.
Ultimately, I believe that this market will continue to drift lower and therefore have absolutely no interest whatsoever in buying this market. I think that every time we reach a large, round, psychologically significant number you have to think that the sellers are looking to sell.
Should be long-term trend
Even though I believe that this market is in an oversold state, the market simply cannot be bought at this point. After all, I look at this market as one that fell for a reason, and now every time we bounce I believe that represent value in the Swiss franc. I in fact have no interest whatsoever in buying this pair because I just don’t see the scenario in which it can happen.
The question is whether or not we can break down below the 0.97 handle, which I think certainly can happen given enough time. It really comes down to what the Europeans have to do before it’s all said and done. Ultimately, I am going to continue to sell and sell again as short-term opportunities present themselves. I expect a lot of volatility, so I am not necessarily looking for longer-term trades at this point in time. I am also comfortable shorting off of shorter-term charts as well.
