The EUR/CHF pair initially fell during the course of the session on Monday, but turned back around to form a little bit of a hammer. We formed a hammer during the session on Friday as well, and as a result it looks like there is more than enough support at this area to continue to keep this market afloat. The 1.08 level has been supportive in the past, as well as resistive. Because of this, it makes sense that we should continue to see quite a bit of interest in trading this general vicinity, and as a result I think it makes sense that we get a bit of a bounce from here.
Looking at this chart, you can see that I have the 100 day exponential moving average plotted on this chart. This market looks as if it is finding support at the 100 day exponential moving average, which is one that a lot of longer-term traders will pay attention to. Ultimately, you also have to look at the Stochastic Oscillator below, which has recently crossed yet again. This of course is a sign that momentum may be picking up to the upside.
Swiss National Bank
The Swiss National Bank has been working against the value the Swiss franc in terms of Euros on and off for years now. They have recently released financial papers that suggested that they have been involved in this market yet again. It is my opinion that somewhere near the 1.08 level they are trying to defend this market. After all, you have seen the Euro fall apart against other currencies while it has sat fairly still in this area.
Because of this, I feel it’s only a matter time before we bounce towards the 1.09 level, and then the 1.10 level. Once we get above there, I feel the market will then try to reach towards the 1.20 level which is my longer-term target anyway. That’s where the currency peg had sat for the previous 4 years, and as a result it makes sense that we will try to fill that massive selloff candle.
