By: Mike Kulej
The Swiss Franc has been moving in tandem with the Japanese Yen lately, which means that it mimicked its volatility last week. At first, the CHF became very strong only to sell off dramatically on Thursday and Friday.
.jpg "EUR-CHF Analysis, March 21, 2011")
That was demonstrated in most of the Franc pairs, including the EUR-CHF. Just as it seemed that this cross was starting a bullish trend, it sold off sharply, before rebounding. This sell off reached almost 1.2400, nearly matching the all time low from December. In effect, this action created a possible double bottom.
We can see it best on a daily chart. For now, it is only a “possible” double bottom, because the pattern is not confirmed yet. Unfortunately, that will not happen until the price rises above the most recent high, or 1.3205 in this case, something we have to wait for. However, other indicators suggest that the EUR-CHF is indeed building a double bottom.
For example, the MACD indicator shows a bullish divergence with the price. This reinforces the notion of a double bottom around 1.2400. At the very least, this level creates a strong support for the EUR-CHF making it more difficult for the price to reach a new low.