To be honest, I am still analyzing what went wrong last week, since my analysis was completely wrong. The technicals and fundamentals did not match, not even a little! So its time to consider both scenarios…that EU has turned bullish or that this is simply a trap, to get as many people bullish as possible. Looking at the COT reports, I am having a hard time believing that the banks will just accept the loss and move on.
But even if the trend has turned bullish, there is no point to buy the current top, obviously. We need a healthy retrace, profit taking, to take place. The area to look for longs is clearly visible on the chart below. But there is no point to make detailed analysis after a week we just had, we need another weekly candle to know more. So next weekend the situation will be more clear, I hope.
For USDCHF bulls, the situation looks a little better, because while EU broke out of the daily range upwards, uchf is still in the strong demand zone and fundamentally, a strong Franc is hurting the Swiss economy, so there is a good chance of SNB starting to intervene heavily and weaken the Franc a bit. Swiss economy is export driven, 2/3 of the GDP is from exports. On top of that, Franc has a negative interrest rate, so there is no logic in buying it for longterm gain, especially at these levels, against the SNB. The safe haven argument doesn’t hold this week either, as UJ didn’t drop as much as UCHF did. So lets see if next week there is a healthy correction upwards.