Potential signal:
- At this point in time, I’m waiting to see if the market breaks above the 0.64 level.
- If it does, on a daily close and can hold above there the following couple of hours, I would start buying and aiming for the 0.6550 level, with a stop loss at roughly 0.6350.
During the session on Tuesday, we have seen the Canadian dollar rallied against the Swiss franc yet again, as it looks like we are threatening the top of a fairly well-defined trading range. This trading range, bordered by 0.62 CHF on the bottom, and 0.64 CHF on the top, has been important for about 6 or 7 months, and has been reliable during that entire time. In fact, we have only pierced both of these levels by a few pips every time we’ve made a serious attempt to.
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At this point, I need to see whether or not this pair can break above the 0.64 level on a daily basis, and more importantly, hold above there for 24 hours. If you can do that, then I think you have a real shot at the Canadian dollar reaching the 0.66 CHF level. This is in congruence with the pair breaking above the 200 Day EMA over the last couple of days, so therefore all things do look positive at the moment, with the exception of this massive barrier.
On the other hand, if we fail at the 0.64 level, and we start to see the USD/CAD pair break to the upside, it could be a sign that the Canadian dollar itself is in serious trouble. If that’s going to be the case, then I would much rather own the Swiss franc, despite the fact that I don’t really want to own the Swiss franc in general. After all, the Swiss National Bank cut interest rates by 50 basis points in a bit of a panic move recently, and now we have a potential carry trade coming from the Swiss franc itself. After all, the Swiss are surrounded by the European Union, and that is not a good thing economically speaking.
On the other hand, we have the Canadian dollar which could be absolutely crushed if things continue the way they have been between the Canadians and the Americans. Do not misjudge the situation here, despite the fact that Canada has a lot of resources, and it’s a great country with wonderful people, they have absolutely 0% chance of winning a trade war with their southern neighbors.
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