CHFJPY: basic rules of trading in crosses

Each pair in the foreign exchange market is unique. But if we carry out some conditional classification of currency pairs, then we can single out those that are prone to trend movements and those that gravitate toward movement within the the outlined range (flat). The second type includes most of the cross-rates: EURJPY, EURCHF, GBPCHF, CHFJPY, etc. And even among these, gravitating towards flat assets, we can distinguish those that are even more inclined to move in the range. It's about CHFJPY.

This cross consists of quite similar currencies. Similar in the sense that both the Japanese yen and the Swiss franc are classified as safe havens. Or they perform the role of safe-haven assets in the foreign exchange market. Accordingly, in case of uncertainty or panic in financial markets, when other assets begin to move in a directional and one-sided manner, this cross occupies a waiting position and fluctuates in a relatively narrow range. In addition, the ultra-soft monetary policies of the Bank of Switzerland and the Bank of Japan contribute to an increase in the level of "similarity" of these currencies in the eyes of investors and traders.

So, the cross CHFJPY is a very attractive instrument for range trading.

In this regard, we want to pay attention to the current dynamics of the pair. Quotes came close to the level of 112 - the upper limit of the local range. That is, we have an excellent opportunity to open a short position. Sell objectives: bottom of the 110, and optimally - area 109.

As additional arguments in favor of the pair's sales, we can cite quite significant divergences that have formed over the past month: the price is parallel to the X axis, but the indicators (RSI, MACD) clearly point to the “south”. Recall that in the case of discrepancies between the directions of movement of indicators and price charts, as a rule, the "truth" is on the side of the indicators. That is, they indicate the correct direction. In this case, we are talking about depreciation of the CHF relatively JPY.

Summarizing, we can note that in the pair CHFJPY there is an excellent technical signal for sale, which should be not passed by. The risk / profit ratio is better than 1 to 3, which makes the sales of the pair from the current prices very attractive. Our recommendation is the sale of CHFJPY in the area 112 with the targets 110.20 (pessimistic scenario) or 109 (optimistic scenario).