By: Mike Kulej
The recent volatility created by events in Europe is not visible in all currencies. While most of the currency pairs experienced price swings a little larger than normal, a few of the crosses have actually become less volatile and contracted sharply.
One of them is the New Zealand Dollar- Swiss Franc pair. Just earlier this year the NZD/CHF sold off from 0.7500 to 0.6380 in a matter of weeks. That was followed by a rally of almost 800 pips just as fast. By a comparison, during the last three weeks, the price range has been about 200 pips – a non-event.
Even though the NZD/CHF is in a directionless consolidation, we can see that the price is gravitating heavily to the downside. It has repeatedly found support at the 0.6740, yet after every bounce it tends to return to this area, creating a pronounced bearish bias.
That is magnified by a fact that the rallies are getting smaller. Every time the price advanced, it reached a lower high than the one before, suggesting that the NZD/CHF could be getting ready for another move down. Of course, this is dependent on breaking the 0.6740 support, but if it happens, the price could easily test the major low of 0.6380.