Either way, this trend is awful and there’s no need to try and fight and be the hero here.

The Euro initially attempted to rally against the Swiss Franc on Friday, but returned gains as risk appetite not only shows you how weak the Euro is, it also shows you the appetite for risk in general. Beyond that, it shows you how concerned people may or may not be about the Swiss National Bank.

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Remember that the SNB has been known to get involved in the currency markets if the Swiss franc gets a little too strong. It looks like they’ve given up on Europe, because quite frankly, the European Union is about to have a very tough winter. The Swiss have suffered massive losses over the years trying to price this currency pair, especially at the 1.20 level. When they finally gave up the peg, it was in the FX markets in turmoil.

The market should continue to fall

  • Looking at this chart, we ended up forming something of a shooting star at the 50-day EMA, which is a technical signal that many people will pay close attention to.
  • Moreover, it was also just below the 0.99 level, so I think that might get some attention as well. In fact, it looked a lot like a “tombstone doji” candlestick, something you don’t see as often as a shooting star.
  • If we break below, then one would have to think that we will continue lower, perhaps back to the lows near the 0.95 level.

Alternatively, if we break above the top of this candlestick, this could open up the possibility of an attempt back to the 200-day EMA somewhere just around the 1.01 level. This is obviously a much harder decision to make, but it potentially creates this type of trade. We would also need to see the euro strengthen against the US dollar, which will be short-lived at best. Either way, this trend is awful and there’s no need to try and fight and be the hero here. The only way this market will turn around in this environment is if the Swiss themselves step in and start buying Euros, which they have done in the past to keep their currency somewhat competitive.

EUR/CHF

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