Chart of The Day: Bearish EURCHF
EUR: Flows have been more Euro supportive of late, with the single currency getting a lot of that prop from some broad based profit taking on US Dollar longs. The Euro has also been supported on ECB Guindos comments that the risk for a Euro area recession is very low, and on a better than expected Eurozone industrial production read
CHF: The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook. Any signs of sustained risk liquidation, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately may not prove to be as effective as it once was, given where we're at in the monetary policy cycle.
From a technical and trading perspective the EURCHF appears to have completed a three wave correction from its most recent cycle lows setting up the potential for price to continue its dominant downtrend, additional conviction for this view is provided by the highlighted sentiment and momentum divergence. On the day, a move through 1.0964 today would confirm this view and set up a test of pivotal 1.09 support (the monthly pivot point), a failure here would open a move to test prior swing lows at 1.0853. On the day, a move through 1.013 would negate this view.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!