By: Christopher Lewis
The USD/CHF pair has continues to grind sideways lately, and the pair is probably not on the radar of many traders. Sometimes, this makes for the best markets to be involved in. I am not sure exactly what it is about these kinds of markets, but it is as if the world forgets about them, only to suddenly realize there is an opportunity in the pair and pushes price in one direction or another.
I like this pair for a lot of reasons, and one of them is exactly because it isn’t moving as erratically as many others. I like boring and slow, it helps keep the blood pressure low. The idea of fast moving markets changing my fortunes in a few moments is a nice fantasy, but the reality is that a lot of trading comes down to seeing these moves ahead of time. While there is no 100% certainty in the Forex markets, I feel that there is a move coming in this pair for a couple of reasons.
Accumulation
I recently had a new trader ask me on my site about whether there was accumulation and distribution in the Forex markets like there is in the stock markets. In essence, I don’t pay too much attention to it, but this market looks like one that the “smart money” is starting to accumulate positions.
The 0.91 level is the start of massive support down to 0.90 in my opinion. More importantly, the Swiss National Bank is defending the 1.20 level in the EUR/CHF pair. If they intervene, this pair will rise, and rise quickly in sympathy. Also, the fact that the currency on the other side of the pair is the US dollar ensures that there will be a bid for it when there is a run to safety – something that happens a lot these days. In both situations – the Dollar wins.
.jpg "USD/CHF Daily 2/16/12")
I do have two levels I am watching: 0.91 and 0.9250. The 0.91 level is the support that I think should continue to hold this pair up. The 0.9250 level is roughly the most recent high during the middle of last week. Once we get a daily close over that level – I am long of this pair, and holding on until the 0.95 level as I think in the long run, the Swiss and their massive exposure to the European economy is going to hurt them in the long run. In fact, I believe by the end of the year – we will see parity.