Potential Signal:
- I am a buyer of this pair at the 0.9575 level, with a stop loss at the 0.9490 level.
- I would be aiming for the 0.9750 level.
During the trading session on Wednesday, we have seen the euro dropped to the 0.95 level against the Swiss franc, before turning around and showing signs of life. I think ultimately, this is a market that is continuing to look to the inflows into Germany, and stock markets in the European Union as a bit of a hint as to where we are going next. After all, the Swiss franc is considered to be a safety currency, and the Swiss National Bank has recently cut its interest rates by 50 basis points, not exactly a sign of strength.
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Technical Analysis
The technical analysis for this pair is obvious at this point, because it does look like we broke out of a major consolidation area. The fact that we are forming a bit of a hammer on Monday also is worth noting, as the market has been explosive to the upside, and now have pulled back to a crucial figure and the 0.95 level. The 0.95 level is an area that was previously a resistance, so it is worth paying close attention to, as market participants will continue to look at this for “market memory”, as we have seen play out on the Monday session.
The bounce of course is something worth paying attention to, and we also have the 50 Day EMA running higher to reach the 200 Day EMA, which obviously will capture a lot of attention. Ultimately, I think this is a market that will have to continue to be launched, because it is a great barometer for risk appetite as well. The higher we go, the better off risk appetite is in general.
Keep in mind that the Swiss franc is considered to be a safety currency, and as a result traders look at that as a way to escape significant financial concerns. After all, it is typical to see money flow into Switzerland when people are looking to protect their wealth.
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