Day three: our CHF/JPY trade

The pair continues to track sideways, although the strong support seen at 113.70 held again. 

This horizontal support is extremely important as a base for CHF/JPY to push higher over the coming weeks and I still favour a move higher.

It’s for this exact reason why I like to trade in a smaller size and add to a position when the trade is starting to work as planned.

Looking at the technicals, the ten-day RSI failed to print a higher high, which would have been positive for the trade and confirmed the divergence with the underlying price. I need to see the RSI close above 49 for the key buy signal to be provided.

On a more fundamental basis there is a real battle going on in the market between these two currencies and the market is seeing positive qualities in holding both the CHF and JPY as emerging market currencies are sold off aggressively. From a pure positioning standpoint the JPY has been heavily shorted by almost all fractions of the trading and investing community, so those works against the trade however, I still feel the market will feel more compelled to push up the CHF given the threat of further BoJ (Bank of Japan) easing.

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