In a battle of safe havens, the CHF/JPY pair makes for an interesting trade at times. It very rarely moves rapidly, but is more of a “slow grind” as it tends to trend for very long periods of time. However, I have seen an interesting signal in this pair as we have broken above a downtrend line. On top of that, we managed to bounce off of the 112 level, which of course is a large, round, psychologically significant number. That level also happens to be the 61.8% Fibonacci retracement level as well, so we have several different reasons to think that this market should continue higher.
One of the things that’s interesting to look at in this pair as a comparison of safe havens is the fact that both of these currencies can be used to gauge global risk appetite. With that being the case, it appears to me that the Japanese yen will continue to be under serious pressure as the Swiss franc is starting to show strength against it. After all, if the Swiss franc can help to your currency, your currency is probably in trouble.
The 115 level will be important.
I see the 115 level as being very important in this market. Whether or not you choose to trade this pair is a completely different question, but if we get above the 115 level in this market, and especially the 116 level, I believe that the Japanese yen will get absolutely pummeled against most other currencies. You can use this pair as an indicator, and never actually trade it, but find quite a bit use for it. The spread is normally pretty decent, depending on the broker. For myself, I normally see about a 4 PIP spread, and that were me is very reasonable. Granted, the daily range tends to be rather slam, but it is a decent trade to hang onto for longer-term positions.
As far as selling this pair, I do not think that pullbacks will offer that opportunity now. I believe that breaking above the trend line and finding the Fibonacci level supportive is reason enough to think that this market should continue to go much higher.
