The EUR/CHF pair fell during the day on Wednesday, as we continued to grind well below the 1.08 level. We tested the 1.07 level for support, found it and bounced slightly during the session. Because of this, it appears of the market is going to continue going higher, but it will probably be at the expense of stability. Quite frankly, I expect to see quite a bit of volatility going forward, but I still recognize that the Swiss National Bank has been working against the value the Swiss franc in this pair for some time. After all, the recently released reports suggesting that they have been doing this for some time now, and as a result I think that the upward pressure will continue.
Buying pullbacks, now that we have one
I believe that this market had been a little bit overextended recently, and the fact that we pull back now suggests that it’s time to start buying pullbacks again. This is a perfect pullback as far as I can see, as we tested the 1.07 level, an area that should attract attention based upon the fact that it is a large, round, psychologically significant number. I believe that this market will eventually head towards the 1.10 level, given enough time. I have no interest in selling, simply because they don’t make a habit of fighting central banks, especially during the summertime when there isn’t much in the way of volume. In other words, they can throw the markets in whichever direction they choose to, as there isn’t much to fight them these days.
I think that the 1.05 level is the absolute “floor” in this market, I think it’s only a matter time before buyers step in every time we fall. In fact, I believe that this market eventually goes to the 1.20 level, as it would be a complete “round-trip” of the meltdown after the currency peg was ended. With this, I remain very bullish of this pair but recognize we are going to have our down days as well.
