By: Mike Kulej
One of the more underappreciated currency pairs is the CHF-JPY. Under most circumstances, it does not move as much as many others, since both the Swiss Franc and the Japanese Yen often serve the function of “safe havens” and tend to move in unison.
This implied relation between these two currencies can be a little misleading when we look at the recent behavior of the CHF-JPY. After all, since the G7 intervention, the price advanced over 900 pips before slowing down after reaching the recent high of 94.32.
During the last few sessions, the CHF-JPY pulled back from that high to 91.41. This coincides with an earlier low established in mid April. Together, these two points form a lower boundary of a trading range under development, with 94.30 forming the top.
This price behavior signals indecision. The CHF-JPY could oscillate between the two extremes, creating a few trading opportunities. Eventually, the price will move outside this congestion zone, we just do not know when. However, it might be worth waiting for – breakouts from trading ranges often span hundreds of pips and the CHF-JPY should be no exception.