The EUR/CHF pair continue to fall during the month of August, but as you can see I have a massive horizontal line at the 1.20 level on this weekly chart. This is because 1.20 is the area that the Swiss National Bank defended so vigorously in the past. On top of that, the level is considered to be “the minimum acceptable level” by officials at the SNB. This is fueling speculation that perhaps the Swiss will get involved in this market, and I happen to be one of those people that believe this is in fact going to be true.
With the pressure that we’ve seen on the Euro overall, I do not see how this market doesn’t test that area. Ultimately though, I believe that the Swiss will get involved, and probably very aggressively so. With that being the case, I am trading this market the easiest way I know how: to simply place a buy order near that level.
The Swiss simply must defend this area.
The Swiss National Bank simply must defend this area, because there is so much at stake. If they do not defend this area vigorously, the market will simply ignore whatever else they say, and they will have eventually given up. If that’s the case, this pair will absolutely collapse and the Swiss know this. Because of this, they will get involved, simply because it’s the only way to protect their economy. Remember, the Swiss send something like 90% of their exports into the European Union, and the Swiss franc suddenly becoming very strong against the Euro would be an absolute nightmare for Swiss exporters.
I think that the market will probably bounce to roughly the 1.22 level before everything calms down once we get that interaction. We could go as high as 1.25, but at this point in time I’m not worried about getting greedy, as I have simply put in my a buy, stop loss, and take profit orders already. With that being said, I’m a wake up one morning during the month of September with pretty significant profits.
