CHF/JPY traders have been battling it out around a strong area of interest, but now could be the time for traders to settle on one direction.
CHF/JPY Resistance to Hold?
On the daily chart above of CHF/JPY, we can see that 110.00 has been a major area of interest in 2019, mainly holding off buyers in the third and fourth quarter of this year. It’s the top of a consolidation pattern that stretches all the way down to the 107.00 – 108.00 area, so with stochastic indicating overbought conditions, there’s a chance from a technical standpoint that this market may be ready to get back into sell mode.
I’m down with getting into a short position as we’ve got top tier events and potential developments in major geopolitical themes this week that could send traders into risk-off mode, which tends to favor the Japanese yen over all the other major currencies. Most notable is the question of whether or not the U.S. will raise tariffs on Chinese goods (Dec. 15), and the latest FOMC could influence risk sentiment if the interest rate outlook changes from the current expectation of holding for a while. We’ve also got monetary policy events from both the Bank of Japan and the Swiss National Bank this week, and while they’re likely not going to be market moving events, any surprise will likely shake their perspective currencies up.
So, I’m not looking to put on orders/trade now, but what I am looking for before shorting is some combination of the U.S. raising the tariffs on Chinese goods/the FOMC not looking to cut rates anytime soon. And it would likely help if the SNB continued its “CHF too high”/currency intervention mindset. If this situation produces selling in CHF/JPY by next week then I’m jumping in, but I may put on nibblers this week if the pair turns bearish after the FOMC event and if we see some negative updates on global trade before the weekend.
So, be on the look out for those situations and let me know what do you guys think? Are you watching CHF/JPY to move from the strong area of interst as well? Let me know in the comments section below!
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