The EUR/CHF pair initially fell during the course of the session on Friday, testing the 1.05 level for support. Having said that, the market turned back around and bounced off of the support, forming a relatively strong looking hammer like candle. If we can break above the 1.06 handle, the market should continue to go much higher. This area has been a massively resistive barrier, and as a result if we can break above that level the market should then head to the 1.08 handle as it is the next major resistance barrier.
The shape of the hammer of course suggests buying pressure, so I am buying this market on a break above the aforementioned 1.06 handle, or pullbacks and show signs of support below. I believe that the market should continue to go higher based upon several different factors. After all, the Euro is getting a bit of a reprieve lately, as the Greek debt crisis has subsided a bit.
Impulsive move higher
This market has seen an impulsive move higher recently, and as a result I think that the buyers are finally starting to try to get the upper hand. On top of that, it has recently been announced that the Swiss National Bank has been buying Euros in order to try to devalue the Swiss franc. With that being the case, the market looks as if it is going to continue to go higher, and a move above the 1.06 level should be yet another sign of bullishness in this particular pair.
I believe that the 1.04 level will now become the “floor” in this pair temporarily, at least until we can break out to the upside which would focus on the next 200 pips. Ultimately, the Euro has been oversold in general, and as a result this market of course fell rapidly. However, as the debt crisis has chilled out a bit, money will flow back into the European Union out of Switzerland. Keep in mind that the EUR/USD pair greatly influences this pair as well, and that one looks bullish at the same time.
