CAD/CHF Forecast: Heading Towards Resistance Against the CHF

• The CAD/CHF dropped a bit during the trading session on Thursday, but it looks as if it is still trying to drive toward resistance against the Swiss franc.
• That being said, the market is very much in a downtrend, so it does make a certain amount of sense that eventually we will see selling pressure.
• The reason I am doing an analysis on this pair today is that it’s one that a lot of people don’t pay attention to, but I do see a potential setup.

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While the 0.68 level has offered a little bit of resistance, the reality is that we could continue to push a little higher, especially as we have seen a little bit of pushback against the selling pressure during the day. The 50-Day EMA is near the 0.6850 level and is dropping from here. It’s also in the middle of a larger consolidation area, so therefore it does make a certain amount of sense that you would see trouble in that area. If we see something along the lines of an exhaustion candle, I will most certainly be shorting the Canadian dollar against the Swiss franc. Furthermore, you must keep in mind that there is a certain amount of interest in this pair due to the fact that it is highly sensitive to risk appetite.

Looking for Signs of Exhaustion

Think of it this way: The Canadian dollar is driven by crude oil. It’s not that the candidate itself is a dangerous place to invest in, but if there’s going to be a significant slowdown economically, a lot of traders will hide their money in Switzerland due to its stability, and its “safe haven status.” On the other hand, crude oil is going to suffer because it is the lifeblood of the global economy, and therefore it will have a detrimental effect on the Canadian dollar as the demand continues to drop.

If we are going to have a slowing economy out there, crude oil is not going to be an asset that performs well. In fact, we have recently seen a lot of selling pressure, although the Thursday session in crude oil was at least stagnant. Nonetheless, we are in a longer-term downtrend here, so I am most certainly looking for signs of exhaustion after a continued rally or a breakdown below the bottom of the candlestick for the Thursday session as I believe we will retest the 0.66 handles.