Time to Bet on the SNB?
- EUR/CHF traded at lowest level in over 2-years this week
- Cyclical outlook turning more positive on the cross in the days ahead
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
We don't like betting on central bank interventions. As traders who have been long the EUR/CHF over the past few months can probably attest - central banks are not always on the same time table as speculators. The ‘mental capital’ wasted on waiting for central banks to do what they promised is usually not worth it. That said, there are times when cyclical relationships begin to align with the agenda of the monetary authorities. We think we are about to undergo one of those periods in EUR/CHF as several medium-term cyclical relationships are converging over the next few days. In our view, this increases the potential for a change in trend or at least some decent sort of counter trend attempt. Interestingly this timing relationship convergence is coinciding with a more positive news cycle as recent opinion polls regarding the Swiss gold referendum have swung dramatically in favor of the “No” camp which should help relieve some of the pressure on the cross.
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EUR/CHF Chart: November 21, 2014
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk in the Week Ahead:
LEVELS TO WATCH
Resistance: 1.2040 (Fibonacci), 1.2055 (Fibonacci)
Support: 1.2015 (Fibonacci), 1.2000 (SNB)
Strategy: Buy EUR/CHF
Entry: Buy EUR/CHF at 1.2015
Stop: 1.2000 Given (We see significant gap risk if 1.2000 were to break)
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail firstname.lastname@example.org. Follow me on Twitter at@KKerrFX.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.