The EUR/CHF pair fell a bit during the course of the session on Tuesday, as we continue to grind back and forth. This is a market that has more than enough support below to keep this market afloat though, so having said that we are more than likely going to see this market continue to the upside given enough time, but in the meantime I believe that we simply go back and forth.
The Swiss National Bank has been buying the Euro recently, and with that I feel this market has a bit of a “bottom” in place at the 1.0750 level. I think perhaps the Swiss have been defending this area, and therefore I do what has been the obvious trade: buying down at the 1.0750 level again and again. I do not anticipate this market breaking out to the upside in the near term, but given enough time I think it eventually will.
Buy Only
I am only buying this market, and every time we get towards the top of the recent consolidation area, I ignore selling opportunities as I know eventually we should continue to go higher. Once we do, and most importantly break above the 1.10 level, we should see this market try to take back the massive meltdown that we had seen previously as the Swiss National Bank of abandoning its currency peg. That means that we could go as high as 1.20, and in short order possibly.
On the other hand, if we do break down below the 1.07 level, it’s very likely that this market will drop significantly. I do not anticipate that happening anytime soon, but it would show that the Swiss are stepping away or perhaps the Euro has been massively beaten up. After all, even though the market has seen the Euro drop, this pair has been relatively stable. So in other words, if this market breaks down, that shows just how bad the Euro is performing.
