The EUR/CHF pair broke higher during the course of the session on Tuesday, slamming into the 1.05 level. This is an area where I see quite a bit of resistance, so we could see sellers step into the marketplace in this general vicinity. However, we are closing towards the top of the range which of course is a very bullish sign, so I think waiting until we get a daily close to make any type of trading decision is probably going to be the best thing to do at this point.
I believe that the 1.05 level is the beginning of a 300 pip resistance barrier, but I do recognize that once we get above 1.05, we more than likely will try to work our way towards the 1.08 handle. That level should be even more resistive, and as a result I would prefer to see some type of sell signal.
Longer-term trend
The longer-term trend in this pair is of course negative, but it’s obvious that we are fighting it. With that, I believe that this pair being the “epicenter” of the Swiss National Bank and its drama will continue to make this one of the underperformers when it comes to Swiss franc pairs. Ultimately, if we can get above the 1.08 level that would change my attitude long-term, and I think that if we get to that level it will certainly be a significant fight.
At the same time this is going on, you have to recognize that the EUR/USD pair is testing the 1.10 level, which is significant resistance as well. In other words, this is a bit of an indictment on the Euro, and I think that the next 24 hours will decide where the Euro goes overall. If we search selling off and the EUR/USD pair, I don’t see any reason why we won’t sell off over here as well. Ultimately, you have to kind of triangulate between the three currencies in order to figure out what the Euros going to do next. I will not place a trade until the end of the day though.
