The CHF/JPY pair fell during the session on Tuesday, plunging below the 107.50 level. This level was the site of a significant breakout early in September, and as a result we have returned and it looks like the market is trying to decide whether or not the area could be supportive. That being the case, of course this is an area that we should be watching for longer-term directions.
The Swiss franc in the Japanese yen are both considered safe haven currencies, so this is in a sense a pair that measures the exact strength of the safe haven currencies. Looking at this pair though, there is a definite uptrend and trend line going higher, so I do think that we will eventually see support and watch this market go higher. That being the case, break of the highs for the session on Tuesday would be enough for me to start buying, as it looks like the Swiss franc is going to continue to outperform the Japanese yen.
Safety first
Keep in mind that these are both safe haven currencies, so this pair actually can tell us a lot about where money is flowing. If there is a certain "risk off" element to the markets on the whole, watching this pair will become very interesting because it shows exactly where the money is going. That being the case, if you use it to decide which currency to buy or sell as far as these two are concerned. If the pair is rising, you want to go short the USD/CHF pair. However, if the pair is falling, you may want to short the USD/JPY pair. By simply following which currency is going stronger, you could profit in other pairs as well by this method, which is known as "triangulation."
Also, you have to keep in mind that if this pair continues to rise, this shows just how weak the Japanese yen could be. If that happens, expect to see the USD/JPY, EUR/JPY, and GBP/JPY to do quite well as the Japanese yen would be showing its exact lack of strength.
