One of my favorite risk related pairs is the AUD/CHF pair. This is because we have to currencies that are complete polar opposites in this market. The Aussie is well known for its relationship to risk assets such as gold, copper, and many other hard commodities. When the risk appetite goes up, there is normally a rush to buy the Aussie as the country of Australia exports so much of the various industrial metals and the like.
On the other side of the trade is the Swiss Franc. There are few places that scream “safe haven” like Switzerland when it comes to the currency markets. With this in mind, it makes perfect sense that in good times, this pair will rise. However, when traders are nervous, they will sell this pair as they dump the riskier Aussie for the safer Franc.
While some of you may not trade this pair, it should be noted that it is a pair with two of the world’s major pairs in it. It also tends to have a reasonable spread – my broker has roughly a 3.5 pip spread, and it is just as technical as any of the major pairs. In short, it’s a great pair to trade because of all of these reasons, and the fact that it is simply a “risk on, risk off” market.
0.9350 shooting star
The 0.9350 area looks like a relatively important support and resistance level. The pair has reacted to this level several times on each side of the coin, and as a result it looks like a good place to see a trade set up. The daily candle for Monday was a shooting star at the bottom of a descent in this market, and the fact that it shows up at the bottom signifies that the bulls simply could not rally this pair – never a good sign.
With all of the headline risks out there, I am not ready to buy this pair, and with the shooting star it could signify what I suspect – there is a lot of fear out there just under the surface. I am selling on a break below the 0.93 level.