Looking at the CHF/JPY pair, it appears that we are approaching a significant resistance barrier above, in the form of 110. This is an area that has previously shown support, and should now be resistive. Because of this, we at The Trader Guy are waiting to see if there is enough exhaustion in this region in order to start selling yet again. After all, this market has been in a significant downtrend since the beginning of 2015, as you can see on this chart.
There is an obvious downtrend line, and the 100 day EMA looks as if it is offering a lot of resistance also. With this chart, it looks as if we are getting ready to find selling pressure again, and we think that this market will roll over again, as we are a bit overextended at the moment, and of course understand that the European continent is still a place that people are concerned about. While the Franc is a separate currency, it is important to remember that the Swiss economy is highly leveraged to the EU.
CHF/JPY running out steam?
On the other hand, the Japanese yen is considered to be a safety currency, and with this, the market will prefer to move money from the continent to Japan itself. The confluence of all of these factors has us looking for exhaustion, or quite frankly and reason to sell at this point. In fact, it isn’t until we break above the 111 level that I can consider buying this pair.
I know that the Bank of Japan is unhappy about the value of the yen, and could try to push higher in other JPY-related markets, but in this one the Swiss National Bank could push back. Also, the Japanese are more interested in the USD and the EUR markets when looking at the value of the yen.
In other words, this is a place that the Japanese will more than likely turn a blind eye to, as the amount of trade between the two countries is very small to say the least. The pair is a very negative one over the longer-term, and should continue to be.
