EUR/CHF Daily Chart 11:46 AM EDT 9/7/2012
The 1.20 floor: If the EUR/CHF chart in was an EKG, it shows a flat-lined market who periodically gets a jolt. Looking at the daily chart, we see that the EUR/CHF has been mainly stuck at 1.20, the SNB’s “floor” for this pair (Swiss National Bank president Thomas Jordan had vowed to keep defending this level and not letting the Swiss Franc appreciate further against the euro).
Rumor of 1.22 floor: Today (9/7), we observed the 4th spike since hanging April when this pair lost its volatility and flat-lined at 1.20. Note that this spike in the daily chart is stronger than the previous 3 attempts. The rumor is that the SNB will be fine with a 1.22 peg according to a nasdaq report.
Different spike: The spike is stronger than before, and looks to be built more solidly because
1) the move is a 3-day move from 1.2010 to 1.2155 by the 9/7 US session.
2) The RSI was able to push above 70 showing that this rally has momentum unlike the previous 3 spikes where there was an immediate rejection and regression back to the 1.20 floor.
3) Price is now on the other side of the 200-SMA if it can indeed close above 1.2060 today (9/7).
Retreat after NFP: However today’s (9/7) poor NFP data pressured the USD, and puts safe-haven flows into the JPY and CHF, giving the swiss franc a boost. This can help explain the rejection after the EUR/CHF cracked the previous resistance pivot at 1.2146. The 1H chart shows that reaction.The thing is, we are in a risk-on environment, evidenced by the rally of the S&P 500 into multi-year highs (near pre-crisis high). If the EUR/CHF’s spike is indeed different, maybe it will find consolidation now near 1.22.
If price action does respect the little brief consolidation seen in the 1H chart around 1.2050, then the case for a rally to 1.22 is still in the play. A break below that, and the RSI falling below 40 however would reflect a loss of this bullish momentum we are seeing this week.
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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