CHFJPY: bet on yen

The current prices (the lower boundary of the medium-term range 110-118) are in themselves the reason for buying a pair CHFJPY. This is a very ordinary transaction within the strategy: "buy from the bottom of the range, sell from the top." In this case, the stops are placed below 109, and the profits are set either in the intermediate level (113 or 116.20) or near the upper boundary of the range 118.

But this time everything can go a little differently, namely the pair CHFJPY can break through the lower boundary of the range and in this case the potential for drop to the level of 103 is opened. This is another story in terms of the direction of the deal and the trading strategy. Which option to choose - the classic purchase from the lower boundary, or the sale in terms of breakdown and further decline in the pair?

A very serious reason is needed for a breakdown of the lower boundary. What can lead to such a radical change in the balance in the pair? On June 10, Switzerland will hold a referendum on so-called "living money". The answer "yes" in the referendum will mean the start of a radical reform in the Swiss banking system with extremely unclear results. This can seriously damage the status of the Swiss franc as a safe haven and given that only the Japanese yen has such a status in the foreign exchange market, it becomes clear that investors fleeing the franc will flee primarily in the direction of buying the yen. What for the pair CHFJPY will mean its sharp decline.

In total, in the light of the upcoming events, we recommend selling the pair. And short positions should be kept until the announcement of the results of the referendum in Switzerland, which will be held on June 10, 2018. Ideally, you should enter the position on the fact of the breakdown of 110, which greatly increases the probability of success. The minimum target is 103.