Technical analysis of EURCHF in view of the January 15 5-year anniversary

Small volatility leaves smaller opportunity for traders because it is much easier to grab some pips in over 100 daily pip range instead trading on 70 daily pip range. So, in these times you can expect that you will have lower average pip income. 2008 and 2010 year were years in which November had impact on the trading pair pip range. 2010 year had change in Libor percentage where SNB lowered target range for Libor by 150 basis points. First chart shows how the pair is doing on the trading sessions compared to other trading pairs. I have ordered pairs on the chart to easily see which pair has lowest and which have the highest volatility.

The corresponding area of the chart shows a plunge to the level of 1.02. That day was the start of an uptrend, which EUR/CHF has not seen since 2007. With the freely traded Swiss franc, the EUR/CHF was now on a rising curve. However, as soon as it reached the historical level of 1.20, things turned dark again. Bitcoin Price The Bitcoin price is the thing about this cryptocurrency that gets the most attention. Especially when its in a bull run, like it did in late 2013 and again in the second half of 2017.

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eurchf crash

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The Infographic below describes the causes, events, market reaction and aftermath of the crash. After the SNB abandoned its long-standing FX rate cap against the euro, the CHF soared beyond parity with the EUR, fueled by the strength of the franc. Plotting EUR/CHF graphs was the equivalent of looking at a non-functioning heart rate monitor that flat-lined. Why is it better for Europeans to keep their security/savings in Swiss francs rather than in euros?

eurchf crash

On the Friday there is still volatility, higher comparing to the Monday, but lower than the Wednesday or Thursday. You will see further in this post on the chart how overlap time have impact on the pair volatility during the day. The financial intelligence book review London session gives us great volatility which is double than the Sydney session on some days in a week. Because the EUR is European currency, many traders love to trade this currency and consequently pair have higher volatility.

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These indicators have impact on the price of any currency and they are ones which you should watch. Price index is telling how the price of consumer goods and manufacturing material is doing. These prices have impact on inflation and consequently on interest rates. When interest rates is increasing that is good for currency so you can expect price of EUR will rise. Why does it rise – because when there is high interest rate in country it attracts more investors who can benefit on high rates. Countries with high level of inflation depreciate more compared to other currencies.

eurchf crash

2012 year was a year with very low volatility on the pair because of SNB target cap of 1.2 against Euro. This was a period that were not acceptable for traders who wanted to earn some money. August is second month with rise on the average monthly pip range. On the Friday traders tend to close their positions due to weekend on which sometimes can news be published, which have high impact on the pair. So, to avoid that kind of possible problem, if news are against trader, they close their position on Friday.

Connection Between Volatility and News

Smaller volatility can trick you in a way you think there is a trend but momentum slows down and you get stuck in a trade. You have less trades available or signals from your trading strategy and your strategy begins to give you less profitable trades. 2016 for EUR/CHF pair were influenced by GBP referendum where U.K. This referendum had so much impact on the currency that several forex take profit strategies years after that, question about Brexit is still open and uncertain how will end. Generaly speaking there were no major events except 2011 year where SNB had intervention about 1.2 cap on the Euro. Third signal that tells you is that support level is old level where price bounced which means there are buyers who could push the price again to previous resistance level.

But have in mind that trading pair chart is not only with one currency but with two currencies. This means sometimes if interest rates is increasing for EUR it could happen that trading pair value will not increase. Reason could be that CHF is stronger even interest rate on EUR is rising pair price could remain moving sideways or even falling. Time overlap between the London and New York trading session, news publishing, large amount of traders on the market have a result as increased pip volatility in that time. The crash caused unprecedented slippage in Euro and Swiss Franc currency pairs, bankrupting many FX brokers and leaving a huge number of traders with negative balances.

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The bank also sold billions of Francs in the foreign exchange market to keep its currency cheaper against the Euro. Another way of trading EUR/CHF is to look for support and resistance levels where price stalls or bounce. If you take a look on the image above “EUR/CHF trading range” you can see pair is respecting levels on monthly basis. While it is in the range you can see on weekly time frame how there is support and resistance level that trading pair is respecting.

This we call large spike where event made three or four times larger monthly pip range compared to “standard” monthly pip range. During the Friday you could see that the price of the pair reverse against weekly trend. Reason for this is also in closing positions of the traders who takes their profit from the market. I accept FBS Agreement conditions and Privacy policy and accept all risks inherent with trading operations on the world financial markets. On January 15, 2015, the Swiss National Bank announced the end of the EUR/CHF peg.

Therefore, the demand for it started rising and driving the relative value of the franc up. Consequently, EUR/CHF has been mostly in a downtrend since then, practically nullifying the efforts of SNB to support EUR/CHF as it is now even lower than where it was before the peg. Since October 2007, the euro was losing its positions to the Swiss franc.

Without large spike above 600 pips in 2018 we would have low pip range volatility in the last few years. Comparing last years with previous ones you can see that pip range is declining. In the next part of the blog post I will show you 12, twelve, charts which shows the EUR/CHF analysis over few decades in order to give you the best pair volatility overview. These key characteristics are done over weekend before or on the start of the week.

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