06 Sep GBP CHF Rockets on SNB Euro Peg News
The big FX story of the day came courtesy of the Swiss National Bank confirming it would fix the CHF exchange rate at EUR 1.200
I’ve not been following EUR CHF but I have been watching GBP CHF for confirmation that a medium or long term low could be in place.
Some analysis I recently provided on a forum prior to starting this blog suggested we look to buy GBP CHF on a retest of it’s broken down channel from above. The following chart from a couple of weeks back pictures this explanation. The idea being that a combined gap fill, channel test, and fibonacci retracement would provide a sensible low risk long entry:
Price had been testing this targeted area for a couple of days prior to today, so the option to take the risk of a long entry with relatively tight stops was fairly well presented.
Today’s chart shows the result of that entry, clearly boosted by the SNB news to give an astonishing intraday low to intraday high move of approximately 1200 pips over a very short time frame – 2.5 hours for the full move, with the vast majority of it taking place in under 5 minutes. Quite an incredible sight, shown here on todays daily chart:
I do currently hold a long position in this pair and ultimately looking to target the top of the projected channel which again would combine with a test of the 61.8% fib retracement from the February 2011 high and also a possible test of the daily 200 MA. This would suggest an upside target of around 1.4100
How, and if price will achieve that level is another matter altogether. After such a huge intraday move it’s very difficult to suggest exactly what may happen next, but as I’m already positioned long I’ll hold onto it a bit longer for a better picture of what may be developing.