EUR/CHF Forecast January 20, 2015, Technical Analysis

The EUR/CHF pair had a slightly supportive the day during the session on Monday as we trying to recuperate from the surprise Swiss announcement. That being said, we believe that this market will continue to go a little bit higher, but we would prefer to break the top of the range from Friday. Keep in mind that the market of course is a negative overall but was completely oversold to say the least. It really comes down to your comfort level, because if you are one to take a lot of risk, you could be buying. On the other hand, if you are one that is very risk averse, you could simply wait for a selling signal above. Certainly, we are going to remain in a downtrend, that isn’t the question. The real question is how far can we bounce from this massive selloff?

We believe that looking at large round numbers will be the way to go going forward. With that being said, we believe that the 1.05 level could be an area of resistance, just as the 1.10 level will be. There is in a whole lot of information to work off of as far as the recent charts are concerned, simply because the Swiss National Bank kept this market at the 1.20 level for so long. That being said, we believe that there should be sellers above, but needless to say a lot of people out there will probably look to take profits after such a massive move. After all, how often do you get this type of action in the currency markets?

The alternative is of course the breaking down below the lows that we saw from last week, but that seems to be in an extraordinarily unlikely scenario as the force of the drop was out of control. Moves like this almost always get a bit of a bounce, so going higher from here is probably what you can expect. For how long, that will be the real question to ask and will determine where we go next.