- The Canadian dollar is plunging against the Swiss franc during trading on Thursday, as the 200-day EMA has shown itself to be resistance, but more importantly, the top of the overall trading range between 0.62 on the bottom and 0.64 on the top.
- This is a range that has been important for some time.
- At this point, the market seems to be respecting that.
Ultimately, I think this is a situation where we have a lot of back and forth grinding because neither one of these currencies are overly bullish. They both have seen a little bit of luck against the US dollar as of late, but from a longer term standpoint, both of these currencies look very weak. That being said, the situation now is that we have failed to break out.
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So, you have to ask the question whether or not we are going to continue to see sideways action or will we bounce from the 50 day EMA? That is to be determined, but I will be watching the 50 day EMA because it of course is an indicator that a lot of people watch anyway.
On a Rally
If we turn around and rally, I would anticipate that a break above the 0.64 level could kick off a move to the 0.66 level. I don't think that's easy, though, and really at this point what we would probably need to see is some type of agreement between the Americans and the Canadians to get that specter off the head of the Canadian dollar itself. That being said, though, it's also worth noting the Canadian economy isn't exactly strong trade with the United States goes unimpeded. That certainly gives it a leg up on Switzerland going forward, as the European Union continues to struggle, giving the Swiss a headache.
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