The euro was very noisy on Monday, as traders continue to try and sort out where the currency pair is going. Keep in mind that the Swiss National Bank is watching very closely how the Franc is behaving.
EUR/CHF
The euro has been very noisy during the early part of Monday trading as we continue to threaten a major support level. The 0.91 level is an area where a lot of people will be watching for signs of support and so far, it has held up.
Keep in mind that the euro is the currency that the Swiss watch the most and the Swiss National Bank has recently reiterated its displeasure with a strengthening Swiss franc. With this, I think you have a situation where traders might be looking for some type of bounce, but we don't have the external catalyst quite yet.
The Danger of Central Bank Intervention
I do understand that if we break down below the 0.91 level that only increases the danger of the Swiss National Bank getting involved. This could end up causing major problems for traders around the world and could cause this market to truly take off to the upside.
With that being the case, I think you have to understand this is a market that will eventually try to sort out whether or not it can turn things around but it is worth paying close attention to this due to the fact that you not only get paid to hang on to the pair but eventually we probably see this thing turn around completely anyways.
After all, markets can only go in one direction for so long and with that, I think you have to understand that a little bit of patience probably goes a long way. As far as breaking below the 0.91 level is concerned, I would not chase that trade to the downside because you will be risking the wrath of the Swiss National Bank. To the top, the 0.92 level could be a potential target.
Potential signal: I am a buyer of this pair, with a small position. I will stay in it until the 0.91 level gets broken, putting my stop at 0.9080. This is simply a swap collection play, and I will make profit once I am 70 pips higher. Think of it as a “dividend play.”
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