[TW] 12-19-2011 - EUR/CHF (long) by Schnitzel


Daily Chart EUR/CHF

Long or Short: long
Entry Point: at 1.2125 and 1.2050
Stop Loss: 1.1950
Profit Target/s: 1.2425
Reward-to-risk Ratio: ~1:1.7
Risk percentage: 1% of my account per trade

EUR/CHF is ranging between 1.2125 and 1.2425 with 1.2125 as a strong support level and 1.2425 as a strong resistance level. Technical analysis is supported by the minimum exchange rate of 1.20, which the SNB is defending. Therefore price is extremely unlikely to go below 1.20.
The Swiss Franc has suffered a strong loss to the Euro from monday to wednesday after speculations to increase the minimum exchange rate to 1.25. Those expectations were smashed by the SNB monetary policy on thursday to leave their actions unchanged. Afterwards the Franc climbed to a new 1.5 months high towards the Euro with its highest daily gain after it was linked to the Euro. Unfortunately the Swiss economy is depending on a weakening Swiss Franc, as explained in the SNB monetary policy. Inflation may only decrease, if the CHF continues to weaken. The SNB did not react to the incredible jump of the CHF.
For that reason the SNB has to take further action at the latest if the EUR/CHF keeps falling towards 1.20 and might increase the minimum exchange rate to strongen the Swiss economy.

“Don’t tell the SNB, but the Swiss Franc is rising.” is one sarcastic comment that i read today, which illustrates the disappointment of speculators. They might even challenge the SNB to defend their 1.20 level, but how long will the SNB just watch?