SNBs Jordan is on the wires saying the the markets have gone too far, perhaps in an attempt to coax a late day rally into the weekend.
EURCHF 5 minute chart.
The traders in the EURCHF did take the price briefly higher and above the 100 bar MA on the 5 minute chart (for the 1st time since earlier in the day). However, that push failed and the price has moved back below. Nice try. The market seems to be voting it’s displeasure with the SNBs actions this week.
So what are the technicals in the EURCHF saying?
In order to make a judgement, focus on the 5 minute chart is probably the best tool. Volatility remains high and trading ranges are also larger. So traders need to keep a sharp eye on the risk (the hourly and daily charts are fairly worthless).
Anyway, if the EURCHF is to recover, the buyers need to show they can take back some control.
Looking at the above chart, of the shorter term action today, the price was trying to build value above the 1.0063 level earlier today. What is the significance of that level?
The 1.00638 level was the low price going back to August 2011 before the ECB enacted the peg of the EURCHF at 1.2000.
However, when the price fell below the upward sloping trend line, the 200 bar moving average (green line in the chart above) and the 1.00638 level during the early NY session today, the selling in the pair intensified.
The correction since bottoming at 0.97472 has gotten into the 38.2% – 50% retracement area of the days trading range, but that’s it. If this pair is going higher, the price needs to get and stay above the 100 bar moving average, the 50% retracement, the 200 bar MA (green line), and then the 1.00638 level. This would be the absolute minimum for the bulls/buyers to show that they are trying to take back some of the control – at least at these lower levels. Failure to do that and the sellers remain in firm control of the bearish trend.
Do I recommend taking a position in the pair going into the weekend. No. The weekend risks are still too great. Next week we can revisit the situation and see where the pair stands vs. the levels outlined here and the market volatility. If risk can defined and limited and markets are more orderly, there may be some trading opportunity. But you can bet, the market will continue to be wary and scared – and rightfully so.