The EUR/CHF pair went back and forth during the course of the session on Friday, testing the 1.03 level for support. The candle that formed for the day was somewhat neutral, but at the end of the day what’s more important is the fact that the 1.03 level offered support. With that, we believe that this market is going to continue to consolidate between the 1.03 level on the bottom, and the 1.05 level on the top.
Looking at the Euro in general, it appears that it is ready to go higher, especially when you look at the EUR/USD pair. Ultimately, if we can break above the top of the range for Friday, and more importantly most of the week, I believe that the market will then head to the 1.05 handle given enough time. Ultimately, I believe that the market will continue to consolidate sideways, but I do not know whether or not we can break above the 1.05 level.
Long only
I don’t have any interest in shorting this market, simply because there’s too much going on between the European Union and Switzerland. The area below is massively supportive in my opinion, and as a result I think that it’s only prudent to buy this market in this consolidation area. On the other hand, if we did break down below the 1.02 level, then I feel that we could start selling. In the meantime though, I anticipate quite a bit of choppiness, and we should continue to grind away sideways overall.
This market tends to be very choppy and will go sideways for long periods of time. Ultimately, I believe that is what we are seeing at the moment, and think that as long as we stay within this consolidation area, you just have to simply assume that both support and resistance is going to hold out over time. With that, short-term trades should be the way to go going forward.
