The EUR/CHF pair tried to break higher during the course of the day on Friday, but as you can see the 1.05 level offered enough resistance to turn the market back around. By doing so, the market in an up forming a shooting star which of course is a very negative sign, and the fact that it is a large, round, psychologically significant number it has of course caught my attention. We are obviously in a downtrend, so that just adds to the validity of the move.
With that being said, I believe that if we break down below the bottom of the candle for the session, we should see this market move much lower. Because of that, I am more than willing to sell a break down below the lows, and that the market should drive back towards the 0.98 level which was the beginning of the bottom that we had seen after the Swiss National Bank announcement.
Cannot fight this trend
I don’t care what happens, I have no interest whatsoever in fighting this trend. The only thing that could change that is if the Swiss National Bank suddenly comes out and decides that it needs to put a floor in this marketplace again. I don’t see that happening right away, or ever for that matter. The fact that they simply way from the floor tells me that they have zero trust in the Euro in general. That is a horrible sign for the Euro going forward.
Looking at this chart, even if we broke above the 1.05 level, I would be more than willing to wait until we get another resistive candle and a large number. Sooner or later, the sellers will come back in and push this market much lower. If that’s the case, this is a “sell only” type of marketplace, and I will obviously do just that. After all, there’s no point in fighting this type of massive trend, and ultimately I think we will break down even lower than the recent low.
