- The US dollar gapped lower against the Swiss franc to kick off the trading session on Monday but then turned around to fill the gap.
- After that, the market then started to drop even further, and now it looks as if we are in the midst of trying to build a bearish flag.
- This obviously is a very negative turn of events, and at this point in time it’s likely that the market is going to trigger a lot of selling pressure, but at this point in time I would need to see the 0.79 level gets broken to the downside in order to kick off the next leg lower.
Technical Analysis
The technical analysis for this market is obviously very bearish, but we also have to pay attention to the fact that we are near an area that’s been with massive support more than once in the past, and I think you have to look at that as a situation where we could see a lot of support and buying pressure, but if we were to break down below there, then we could really start to see an unwind, and I think at that point in time you would see the US dollar fall apart against multiple other currencies, not just the Swiss franc itself. That being said, you also have to keep an eye on the Swiss National Bank, because they are known to get involved when the Swiss franc strengthens too much.
All that being said, it’s actually the EUR/CHF pair that you will have to close attention to, because that’s the currency set up that the Swiss pay the most attention to as over 80% of their exports to. In other words, it has an outsized effect on the Swiss economy, so the central bank of course will pay close attention to whether or not there exports get to be a bit too expensive for their largest market.
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As things stand right now, it’s difficult to buy this pair but if we were to break above the 0.81 level, I will start getting long.
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