This is a classic descending wedge reversal signalling a short squeeze in the pair.
With the recent reversal in the USD/CAD from the key 1.3065 level resistance and the USD/CHF squeeze higher, the CAD/CHF looks like it will rally from current levels.
The .7566 (38.2%) or .7641 (50%) retracement levels look like reasonable targets.
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I am not long the CAD/CHF, but may get long in the coming day(s)
With (hopefully) the worst of Greece past us (for now) the desire to hold a currency that has a negative interest rate is a less appealing prospect for institutional traders. The safety of the Swiss currency may not be needed in the near term, and we may see investors move back out of the CHF that had been accumulated (just) in case things in Greece did not work out.
Also, worth mentioning is the strong correlation between CHF and Gold. With Gold breaking 1130 and falling to mulit-year lows, this may be another reason traders and investors may continue to shun the Swiss Franc.
A sustained break above 1.0525 would further support the bullish argument.
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I am starting a EUR/CHF long position today. I do currently hold CHF short trades on other crosses as well.
I would suspect this relationship would have been stronger if the Swiss/Gold referendum was passed back in November 2014 to bring up SNB reserves to 20%. Here is the chart:
Gold – Red Line
Blake Morrow
Chief Currency Strategist
Disclaimer: I am short CHF
If you recall my blog post from mid May, the GBP/NZD is now reaching for that 3000 pip gain! Many of us captured portions, if not the lion’s share of this rally. But at this point you have to ask how far will it go? Expectations of a rate hike from the BOE has pushed the GBP higher over the last few days, and next week the RBNZ meets and some expect that they could (once again) cut rates. However, if expectations of a BOE rate hike is premature, and the RBNZ holds rates at 3.25% next week, we could see the GBP/NZD stall, especially at such critical resistance. Take a look at the monthly chart:
On the monthly chart this pair is facing a major resistance trend line that spawns back from 2002. Also, you can see the previous support from December 2005 and February 2008 both come in just above 2.4100. Also, the RSI is extremely overbought as well.
On the daily chart we are closing in on channel resistance. Also, daily RSI is divergent as well.
One other clue I have is the NZD/USD, which is coming into a cluster of Fibonacci levels at the .6300-.6400 levels. These levels are from over 2 decades of price action.
Bottom line, the GBP/NZD may be a little tired here. I am not sure this will change the trend of the GBP/NZD, matter of fact, I suspect in the coming months the 2.4100-2.4200 level is broken, especially with the BOE follows the FOMC with higher rates into 2016. But, there may be a nice pullback/pause at current levels that I am willing to trade.
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I am looking to sell short the GBP/NZD above the 2.4000 level in the coming trading sessions
The AUD/NZD has been on a strong run for the last several months, but the last month the flag pattern started to break out. Today, we have hit a weekly downtrend line that may pose significant resistance:
If you look at the daily chart, the pair looks like we will post a “shooting star” reversal candle:
I am sure at some point the AUD/NZD will break higher as the New Zealand economy continues to weaken and the RBNZ cuts rates further. I suspect the Australian economy will start to stabilize following the weakness it has felt due to the slowdown in the Chinese economy and the pace of rate cuts by the RBA may start to slow, if not stop. However, the NZD looks fairly oversold against many currencies, so we may be due for a pullback before breaking the long term down trend.
Hat Tip to @A25Forex for bringing to my attention
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I did establish an AUD/NZD short position today near current levels, and I may add to it in the coming sessions.
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