- The Australian dollar is gone back and forth against the Swiss franc during the trading session on Friday, right in the middle of the larger trading range that we have been in for what seemed like a lifetime.
- In other words, this market is very “neutral”, but what makes it so interesting to me is that it’s a major barometer for risk appetite, as the Australian dollar is based on commodities, and of course the Swiss franc is considered to be a “safety currency.”
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What I find interesting is that despite the fact that there is a lot of noise out there, the reality is that this pair doesn’t show a lot of fear. We have been trading between 0.5175 on the bottom and 0.53 on the top 4 months, and we are basically right in the middle of that. With this being the case, I think you can use this as a secondary or even tertiary indicator on where to trade with other markets.
Clearly, if we break out of this range then that changes things. If we break above the 0.53 level, then it’s likely that the market could go to the 0.54 level rather quickly as the 200 Day EMA is right at that level. On the other hand, if we break down below the 0.5175 level, then it’s possible that we could drop to the 0.51 level. However, I think the real money might be made in other assets such as stock indices, meaning that if this market really takes off to the upside it will probably be a huge boon for risk appetite in places like the NASDAQ 100, FTSE 100, etc. On the other hand, if we break down below the 0.5175 level, not only what I short this pair because it is so sensitive to risk appetite, but I would avoid other risky assets such as Bitcoin or maybe indices.
I know this is not a common pair for many of our readers to trade, but it’s a very important one that should be paid close attention to. With that being said, I’ll be watching this chart and I suggest you do as well.