EUR/CHF forecast for the week of August 24, 2015, Technical Analysis

EUR/CHF pair fell during the bulk of the week, but did find enough support just below the 1.08 level in order to turn things back around and form a hammer. This hammer is in direct retaliation to the shooting star that had formed during the previous week. What this tells us is that we will probably a consolidation in this area, but ultimately we believe that there is a high probability that this market is going to continue to go higher. After all, the Swiss National Bank continues to work against the value of the Swiss franc, and with that we feel that this pair more than likely will continue to grind much higher, perhaps heading towards the 1.20 level. The reason we say that is that 1.20 level was the area that the Swiss National Bank was defending for 4 years.

Once the Swiss abandoned the currency peg, this market absolutely imploded. With this, the market looks like it’s ready to make a complete “round-trip” when it comes to the pair, and as a result we believe that hanging onto a break out above the top of the shooting star from the previous week is probably reason enough to start going long. If we break above there, there could be a lot of volatility between here and the 1.20 level, so therefore you will have to have a certain amount of wherewithal to hang onto this trade. However, you have to keep in mind that you have a central bank working with you and not against you, so ultimately this pair should go higher.

Also, if we get above the 1.14 level in the EUR/USD pair, we would not only have the Swiss National Bank working in our favor, but we would also have Euro strength, something that we have not been able to talk about for a very long time. Because of this, we would be even more bullish at that point in time, and continue to add to our position size every time this market did in fact pullback and find support. As far selling is concerned, we aren’t even interested at this moment.