The AUD/CHF is one of my favorite pairs to trade overall, simply because it is a basic assessment of risk appetite around the world. Quite frankly, the Australian dollar although a major currency, is considered to be a bit risky. Ultimately, the Swiss franc is one of the biggest safety currencies around the world, so it makes sense that this market trades almost lockstep with how traders are feeling. The better they feel in the more interested they are in taking risk, the more likely they are to buy this pair. On the other hand, if they are concerned than money generally will flow to Switzerland and away from commodities. Keep in mind that the Australian dollar is a proxy for gold and several other hard minerals, so of course when commodity markets get hit, it makes sense if this pair falls.
Massive support below
I believe there is massive support below at the 0.6850 level, extending all the way down to the 0.6750 level. With this, I think that anytime we see signs of support we have to think about buying. If we break the top of the hammer for the session on Wednesday that is also a very strong sign to start buying at that point. I don’t really have an interest in selling this market at the moment, as this pair looks very comfortable in this area, and it seems to be forming some type of a “base.”
I recognize that somewhere near the 0.71 level we will see a significant amount of resistance, but quite frankly I think we will eventually break above there. Keep an eye on stock markets, because they are one of the easiest ways to measure risk appetite around the world, and if they go higher this pair should follow. Right now, most European indices look like the buyers are starting to come back. You can say the same thing about US indices as well.