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Analysis: EUR/CHF Range Developing?

Kristian Kerr

Since the Swiss National Bank aggressively started intervening in EUR/CHF about a year and a half ago it has gone from being one of our favorite crossrates to trade to one of our least. The collapse in volatility since the SNB entered the picture is a major reason why. Despite this tepid volatility, the cross does from time to time provide some compelling risk to reward trade setups - especially when one is looking to incorporate range trading strategies.

A low volatility environment is really a range trader’s best friend as a range is much more likely to hold in that sort of regime. It looks to us like a broad range might be developing in EUR/CHF. In late February the cross found support at a convergence of the 78.6% retracement of the September to January advance and the 4th Gann square root progression from the year-to-date high in the 1.2115/20 area before recovering aggressively to almost 1.2400 by early March. Earlier this week the cross found support again near this same Gann/Fibonacci area. We like going long near 1.2180 for a move back towards the early March highs.

EUR/CHF Daily Chart: April 10, 2013

range_trade_eurchf_body_Picture_2.png, Analysis: EUR/CHF Range Developing?

Charts Created using Marketscope – Prepared by Kristian Kerr

Event Risk Over Coming Sessions:

range_trade_eurchf_body_Picture_1.png, Analysis: EUR/CHF Range Developing?

Source: DailyFX Calendar


Resistance: 1.2230 (Gann level), 1.2290 (38% retracement of Jan to Feb decline)

Support: 1.2175 (Gann level), 1.2115 (78.6% retracement of September to January advance)

STRATEGY – Buy EUR/CHF at 1.2180

Entry: 1.2180

Stop: 1.2095 (-85 pips)

Target 1: 1.2290

Target 2: 1.2345

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter at@KKerrFX.

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