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CHF/JPY Daily Outlook July 2, 2012

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

The CHF/JPY pair is one that many people don't trade. I believe this becomes a self-fulfilling prophecy as both of these currencies were once considered safe havens. The truth is that the pair is quite a bit different than it used to be, mainly because of the Swiss National Bank and its fight against the appreciation of the Franc. Unlike the Japanese, the Swiss have the ability to actually affect the value of the currency for longer-term moves.

However, the Swiss really won't care about the appreciation of the Franc against the Yen. This is a small market, and as such it will have very little effect on the Swiss economy. Nonetheless, these are two major currencies and can easily be traded with a reasonable spread. Spreads will vary of course, but it is normally somewhere between 3 to 5 pips on the average.

Another thing that I really like about this pair is that it tends to grind slowly, and therefore is somewhat geared for a longer-term trade. In fact, one of the longest raise I've ever had was in this pair, and it lasted for almost 18 months.

50%, 84, 85

Currently, the pair is sitting at major inflection points in the trend. In the cluster we see at this spot, there are many things going on at once they can have a major effect on how the currency pair moves. With the massive gain on Friday due to Yen selling, the market slammed into the 50% Fibonacci retracement level from the fall. This happens to coincide with the resistance zone between the 84 and 85 handles. It is areas like this that make me sit up and pay attention, as I know several different traders and more importantly, several different trading disciplines are all paying attention to it.

CHFJPY Daily 7212

With this being said, on Monday I will be very interested to see how the daily candle closes. We could possibly see some type of week candle in this area - it certainly is the perfect spot - and this would be a classic set up for a return to the bottom of the consolidation area at roughly 82. This will be the trade that I am looking for, but I am willing to buy if we get a daily close above the 85 handle.

Christopher Lewis
About Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
 

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