Potential signal
I am a buyer above 0.57, with a stop at 0.5650, and a target of 0.58.
The Loonie initially fell just a bit during the trading session here on Tuesday against the Swiss Franc as risk appetite was a little bit flimsy. But we've seen it turn around, and as a result, it looks like we are trying to break above the 0.57 level.
Breaking above the 0.57 level would be a victory for the Canadian Dollar, opening up the possibility of challenging the 50-day EMA next, which is just above there, and then the 0.5750 level. This is a pair that typically grinds. It's not a huge mover most of the time, but it does have a positive swap, not massive, but it's there. And of course, the Canadian Dollar has a little bit of help from crude oil from time to time.
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Evaluating Central Bank Dynamics and Key Support Levels
And while the Swiss Franc is considered to be a safety currency, it also has the Swiss National Bank behind it, who looks willing to jump in and intervene, keeping the value of the Frank down.
If we do break down below the 0.5650 level, I'm even more interested in buying the CAD/CHF pair closer to the 0.56 handle, which has been massive support. If we were to break above the 0.58 level, then it opens up the possibility of a much bigger move.
All things being equal, I like the idea of buying short-term dips, and I do think that breaking out above the 0.57 level is also a buying opportunity. I don't think it's a huge trade. I don't think it's something that's going to change your life, but I think it's a nice short-term buying opportunity.
Breaking above the 0.57 level in the CAD/CHF pair looks to be the next potential move, one that could open up a bit of a trade. I have no interest in shorting this pair anytime soon.
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