The USD/CHF pair originally broke higher during the course of the day on Monday, but as you can see turned back around somewhere near the 0.99 level to form a shooting star. The shooting star sits just above the 0.98 handle, which of course is a large, round, psychologically significant number. On top of that, this is a market that has been a little bit overextended as of late, so it makes sense that a pullback shows itself.
I believe that pullbacks will continue to find buyers all the way down to the 0.96 handle, and perhaps even as low as the 0.95 handle. Ultimately, I am looking for some type of supportive daily candle in order to start going long yet again. After all, the US dollar is one of the favored currencies around the world, and unfortunately for the Swiss, they have to send their exports to the European Union.
Swiss National Bank
The Swiss National Bank of course has intervened against the value of the Swiss franc recently, albeit in the EUR/CHF pair. Nonetheless, that does have an effect in this market, and with that I think that it’s only a matter of time for the buyers reenter the marketplace. I am simply looking for “value” in this market as the US dollar continues to be favored in general.
You have to keep in mind that the Swiss unfortunately have to send 85% of their exports into the European Union. With this, it makes sense that the Swiss of course suffer at the hands of the struggles in the European Union. I do not think that the European Union is going to get worse, it’s just that the situation isn't going to get massively better anytime soon. Ultimately, I think that this pair is going to head towards the parity level given enough time as it is a major round number obviously. With this, I am only buying, but will be patient and wait for candles such as hammers, bullish engulfing candles, and impulsive moves higher after pullbacks.
