What To Do With EUR/CHF

Hello!

Today we will talk about a quite interesting tool - EUR/CHF. This tool is primarily interesting because the economy of Switzerland is significantly associated with the economy of the Eurozone. However, the Eurozone is large, and problems usually start in hotbeds of different countries, which affects the cost of EUR. Switzerland can not boast of such a size, and therefore the mobility of its economy, the speed of reaction to changes and the effectiveness of monetary policy is higher. So, the main risks of the Eurozone may not apply to Switzerland.

In connection with these assumptions, we can assume that the currency market will be subject to trends, which makes it possible to extract profits on the currency pair with sufficiently high certainty.

Picture 1. Price chart for EUR/CHF for the period from 01/01/2018 to 09/17/2018.

As can be seen on the Picture 1, the ratio of the currency pair indeed has significant and long-term trends that rotate in turn. The question arises, how to catch a trend of a currency pair? In this case, we will need help of the index of major traders in the foreign exchange market. Since the market seems to be important for producers in Europe and Switzerland, significant fluctuations in the exchange rate lead to an increase in the number of positions in contracts.

Based on the values ​​of the index for the last month (on the Picture 2) we can clearly see that the volume of positions is decreasing, which indicates a reduction in the value of the ratio of the currency pair. As we see, the reduction of traders' positions indicates a bearish trend. Also, since the currency ratio has quite long-term trends, then if the index is not changed by a significant difference in positions associated with any shock and strong news on the market, then we can rely on the trend in the next two weeks.

Picture 2. The EUR/CHF price chart and the index of large market participants for this currency pair from 08/17/2018 to 09/17/2018

The forecast for the next couple of weeks is the prevalence of short positions on the instrument in the portfolio.