When it comes to currency pairs, the EUR/CHF pair is one that I don’t trade very often. This is a very slow-moving currency pair, but sometimes that’s a good thing. After all, a little bit of stability can go a long way at times in extraordinarily volatile markets. This is why I am shorting EUR/CHF at the moment, because the Euro itself is rather volatile as of late.
I believe at this point that the Euro has much further to go to the downside, and although Switzerland almost certainly will have its own issues with energy this winter, it is worth noting that the Swiss franc has a little bit of a “safety premium attached to it.” Because of this, I am looking to play the long-standing correlation between the 2 currencies, and perhaps more importantly the long-standing trend.
Looking at the chart, you can see that the 50-Day EMA is slicing through the candle for the session, and the market has formed a short-term downtrend line just above. Furthermore, there is a definite longer-term downtrend. I almost never trade against the trend, and this won’t be any different. I suspect that although the 2 currencies will continue to be weak against the US dollar, you can dampen some of the bear market rallies that the EUR/USD has at times, by going long the CHF instead of the USD. (The Swiss franc is a runner up in this case as far as the top currencies are concerned.) This is not to say that I won’t short EUR/USD, just that this is a pair that I am more likely to hang onto for a longer-term move.