Swiss Franc Currency Pairs06 January 2017
It is the start of 2017 so we thought that it would be a good idea to take a look at the technical situation for Swiss Franc pairs.
Of course we have to point out that below you can find only our opinions. It is not possible to predict the exact move direction. Still, we are able to predict where possible resistance and support areas are. This can be important knowledge for someone who wants to change Euro to Swiss franc or other currency.
In the next examples we will check charts with use of technical analysis techniques. We will analyze longer time frames and use mostly yearly Pivot Points.
What are Pivot Points?
Pivot Points are a really great technical indicator used by floor traders. You can spot them on many charts and see different uses for them.
If you want to read more about Pivot Points – check this article.
OK, so now a quick explanation for busier people. Based on previous data we calculate a pivot line (the one you see in the middle), support lines (S lines, we have S1, S2...) and resistance lines (R lines, we have R1, R2...). There are also M lines which are simply in the middle between surrounding lines.
As we can figure out, S lines work as support for the price, R lines as resistance. We can calculate Pivots for different periods. For example short term traders will look at daily Pivots. Longterm traders will look at weekly or monthly.
In this article we take a look at yearly Pivot Points on Swiss Franc pairs. Why yearly? They are calculated based on prices from 2016. Thanks to them we can check where major support and resistance lines are.
EUR/CHF – Euro to Swiss Franc
Lets have a look at the most important Swiss Franc Pair for us which is EUR/CHF, Euro to Swiss Franc. Below we can see a weekly chart (each candle represents a single week) and we have yearly Pivot Points for each year:
First, we can see in the middle of our chart that for the most part of 2016 EUR/CHF was oscillating around the pivot line for that year. There were two attempts to go higher but they stopped at 100 moving average.
Now EUR/CHF started the year at 1.06 level. We can see that this is below the pivot line for 2017 (black line). That means that if the price goes higher, then the pivot will act as resistance for the price. So that way we have our first important resistance level at 1.0844 (black pivot line).
If buyers manage to go above the pivot line (resistance), then we will be looking at 100 moving average as another strong resistance which worked twice in 2016. Also the M3 line can work as resistance.
We have to remember that we are talking about the Euro, which has been impacted by Brexit and other important factors. Because of external events, the Euro is getting weaker. EUR/CHF started this year below the pivot line already, which is a bearish situation. First support is at 1.0666 M2 line, so very close to the current position.
If EUR/CHF goes down then we will have a very important support at S1 line (at 1.0488 level).
Of course, in case that this level won’t hold, we will have new support lines (next M line, S2 line and so on). But it all depends from the trend.
USD/CHF – Dollar to Swiss Franc
We have checked EUR/CHF, but we think it is also a good idea to see what is going on with other Swiss Franc pairs. First, let’s take a look at another currency pair: USD/CHF, which is also a major one (one of four most important pairs in the foreign currency market):
During 2016 this Swiss pair was mostly in a range move. We can see that pivot line worked here as a support. At the end of the year we had few important events like Brexit and Trump’s victory. As it turned out, these events helped the dollar. This is why we can see that the dollar is getting stronger not only against Swiss pairs, but also against other currencies. We can see that on chart the USD/CHF price is going up.
It started the year above the pivot line (black line). That means that if the USD/CHF price moves down, the pivot line will be a support (because price is above Pivot).
Some experts expect that we can see more gains for the dollar in 2017. In that scenario we look at the R1 (1.05) and R2 (1.08) lines as possible strong resistance lines for USD/CHF.
GBP/CHF – Pound to Swiss Franc
Because of Brexit the pound is getting weaker across the board. We can expect here a continuation of that trend. Let’s see how this looks on the chart. We have a monthly chart below meaning that each candle represents a single month:
In 2015 and 2016 GBP/CHF was mostly below the pivot line. This situation is clear here (also based on other factors) as we can see the trend is going down. It is interesting that in both 2015 and 2016 GBP/CHF found support around the S2 line (green area).
GBP/CHF started the year below the pivot line. Obviously the pivot (1.2825) acts as resistance here. If this downtrend will continue, we look at S1 and S2 as possible supports. Based on previous years we can see that testing of a yearly S2 is possible.
AUD/CHF – Australian Dollar to Swiss Franc
In the end lets have a look at a little exotic pair – Australian Dollar versus Swiss Franc. The monthly chart below depicts a very interesting sitiatuion:
We can clearly see that since 2012 AUD/CHF is in a strong downtrend. Each year the pair was below its pivot line. In 2014 the pivot line worked as resistance, but next year (2015) price was way below the pivot line.
In 2016 we saw attempts from AUD/CHF to go above its pivot line. It did it indeed during the last quarter.
AUD/CHF started 2017 above the pivot line. Now we can expect that buyers will try to stick above that level, so the pivot line for 2017 (0.7249) is a very important support level. Above we have potential resistance levels at the M3 line (0.7498) and R1 (0.7747). It is possible that we will see some kind of a range move between the pivot line and R1.
This is a beautiful example where based on pivot lines we can see what is the current longterm situation on a currency pair (Australian Dollar and Swiss Franc)
We presented a few cases where we checked the outlook for the Swiss Franc in 2017. Of course pivot levels are not something written in a stone. We have to remember that these are only potential levels of support and resistance. Still, they give us very useful information which we can use to decide when to sell or buy Swiss Francs.
About the author
Simon Spychala is a currency trader. He runs a blog at http://www.marketsurvival.net where he publishes educational materials and helps other traders to trade currency and other markets.