AUD/CHF Breaks Out During the Session - 8 October 2015

The AUD/CHF pair broke higher during the session on Wednesday, clearing the 0.70 level. This was an area that offered resistance a couple of weeks ago, and the fact that we have made a “higher high” leads me to believe that this market is probably going to try to grind its way back to the 0.7125 handle. That is an area that caused a bit of support and resistance in the past, so it’s very likely that will be the next target. However, there’s a bit more to this pair than meets the eye right away.

When you look at these currencies, they lie on opposite ends of the spectrum. On one hand, you have the Australian dollar which represents gold and commodities in general, as well as growth in Asia. This is mainly because the Australians supply so many of the hard commodities that the Chinese use in construction projects. But also, there is a lot of gold and Australia that is mined out of the ground. So this can represent either one of those plays. On the other side of the coin is the Swiss franc which is primarily thought of as a safety currency. It’s normally bought when there are concerns about financial markets.

Odd

I find this kind of odd as so many people were concerned about financial markets. The Federal Reserve recently said that it was concerned about global markets, and that’s when he can raise interest rates. However, gold has risen recently as a reaction, so this leads me to believe that the Australian dollar going higher has more to do with gold than anything else. Ultimately, I think the Swiss franc is in trouble because of Europe. Yes, the European situation is much better than once was, but Europe is probably going to be sick for years. While the Euro itself might go higher, the Swiss are beholden to what goes on in that area.

At the risk of overthinking this, I decided to simply look at this as a “higher high”, and start buying and aiming for the 0.7125 level. Sometimes, that’s all you can do.

AUDCHF

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.