How to Rock CHF/JPY

Hello! Today we will talk about an unusual instrument that claims to be a personal discovery of the year to trade, namely CHF/JPY.

What does pretend to be so exciting and unusual about this tool? Japan is very far from Switzerland - they have significant differences in time zones. Switzerland mostly related to close European market. It basically satisfies the needs of Switzerland. But the most important thing for us is an extremely highly specialized market, where only large traders are represented. This fact expresses the needs of one or the other side for goods and services, which demand is determined for companies involved in that.

What does it give for us? The market will be trendy. It will express the growing or decreasing demand for foreign currency between counterparties. The rates difference between currencies will also affect the cost, but compared to the usual situation, the interest rates of the two countries are negative, while in Switzerland the interest rates are -0.75 % against Japanese -0.1%.

Let's look at the CHF/JPY price chart in Picture 1.

Picture 1. Price chart for CHF/JPY for the period from 01/01/2018 to 02/10/2018.

As can be seen in Picture 1, the price of a currency pair is the subject for significant trend fluctuations, which makes this currency pair extremely attractive for trading.

Having determined that the market is a trend one, we will move to the index of the major traders in Picture 2.

Picture 2. Index of major traders and the price chart of CHF/JPY for the period from 01/09/2018 to 02/10/2018.

The schedule of the major traders' index allows us to anticipate long-term trends in the market since the formation of this market occurs at the expense of large traders, hence their demand for currency is determined by mutual investments and the maintenance of the value of foreign earnings in national currency. It means that the schedule directly reflects the opinion of market makers of that market. Another important point is that the positions of market makers are stable enough to be guided by them in the long term.

Based on the current chart, in Picture 2, we see that basically the price and the index change in one direction. It means that the current position on the instrument is at local minima, which gives us the opportunity to focus on short positions.

Thus, in the short term, the best solution for trading with this instrument is the predominance of “down” positions.