The USD/CHF pair rose during the session on Tuesday, testing the 0.89 handle. I believe that if we can break above the shooting star that formed in the beginning of April, this pair should go much higher. Keep in mind that this market is the polar opposite of the EUR/USD pair, and as a result it’s essentially the “backdoor” to play and that potentially volatile market. However, as the EUR/USD pair has been very choppy, this pair could be a little easier to deal with. It isn’t as saturated by high frequency traders as the EUR/USD is, and as a result can be easier to deal with
On top of that, I think that the breakout to the upside would validate the larger “W pattern” that we see with a double bottom down at the 0.87 level. That being the case, it should be essentially a 250 pips tall “W pattern”, which should send this market to roughly the 0.92 level, an area that has been rather resistive in the past.
On the other hand…
There is the possibility that we find enough resistance here that the market turns back around. That being the case, I feel that this market could very easily dropped back down about 2 handle is without too many issues as the market could simply enter a consolidation area. However, it must be noted that it is the exact opposite of the EUR/USD pair, and as a result if the market breaks down this market will shoot straight up and vice versa. In that sense, you have to watch both charts, and as a result you have to be careful and not place the same trading both markets as although it can increase your profits, it can also hurt quite a bit once you are wrong.
Because of this, I feel that the market will offer opportunities in one direction or the other, and much like the EUR/USD pair, we are at a point of inflection and as a result I believe that the next 24 hours or so will determine where we go for the medium term.
