Previous: EUR/CHF – Is This Spike Different? (9/7)
With all this focus on the FOMC meeting, let’s take a look at the EUR/CHF, and therefore avoid the risk event. However, it should be noted that there could be an indirect effect. For example if QE3 if affirmed, flow will be out of the USD and unless the market is full-fledged risk-on, some safe haven flow will have to go toward the JPY and CHF. This flow would give the Swiss Franc at least some very short-term strength and hold EUR/CHF in check. With that said, let’s examine EUR/CHF’s recent development.
EUR/CHF Daily Chart 7:35 AM EDT 9/13/2012
Different Spike: The EUR/CHF’s spike last Friday (9/7) was different than its previous 3 times coming off the 1.20 SNB -defended floor. First of all there was no immediate retreat within the session. The RSI also pushed above 70 in the daily chart showing that the latest rally was stronger than the previous ones.
After some whipping action, the EUR/CHF continues to build on its short-term momentum with focus on the previous resistance area around 1.2145, which was 2012- high and resistance pivot from 3/14/2012. The EUR/CHF did set a higher high briefly at 1.2155 on 9/7.
The 1H chart show the market building bullish momentum in a short-term perspective. There was a key pivot at 1.2066, which the market flirted with many times, and even broke below it on 9/12. But as you can see, non of the attempts sustained, and the sharp push was rejected with an equally firm bounce. This support dynamic was accompanied by the 1H RSI reading holding above 40, also reflecting maintenance of the bullish momentum in this time-frame.
That rally pushed above 1.21, and the RSI pushed above 60, a sign the momentum was turning from consolidation mode to bullish mode again. With the recent strength in the EUR, is EUR/CHF finally going to head toward the 1.22 level? So far the momentum and seems to point in this direction, but we will still need to see price clear the first hurdle at 1.2155, as well as get pass the reaction to the Fed decision on QE3 today (9/13, 2:00PM EDT, 18:00GMT).
EUR/CHF 1H Chart 11:50AM EDT 9/7/2012
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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