EURCHF: possible options for reaction to the referendum

Technically, the EURCHF is in a rather interesting place for “buy”. 1.15 is the lower limit of the current medium-term range. In addition, in the last couple years, the dynamics of the pair has been upward, which only strengthens the buy signal from 1.15.

Yes, there were several reasons for the decline of the pair: political problems and scandals in Europe (primarily Italy and Spain) which are pulling the euro down, but for the time being it is more fears and expectations for something bad, but not facts. For the breakdown of the powerful levels like 1.15, serious rationales in the form of real facts are needed, but now we don’t see them.

There is a feeling that the pair can consolidate around 1.15, waiting for the results of the referendum in Switzerland on June 10 (referring to the Vollgeld referendum on so-called "living money" - essentially the monopolization of the monetary sphere by the Switzerland Central Bank, which could potentially hit the entire Swiss banking system and the franc in particular). In current prices, the outcome of the referendum "no", that is, the rejection of radical reform is incorporated. But if they vote in favor of reform there could be very serious consequences. Brexit shows that we should not underestimate the power of populists and demagogues. Franc can quite repeat what we saw several years earlier when it in a matter of hours has changed by 20% +.

Thus, we potentially can witness another flash-crash in the EURCHF pair. The minimal goal in this case is obviously the achievement of local highs in the 1.20 area, in the event of taking it after stops execution and mass stop-reverses, the pair may well reach 1.30. As we can see, in the FOREX there is very interesting trade signal emerges, which is simply a crime to ignore. Especially considering that the risks relative to the profits are extremely insignificant (stops below 1.14, and profits in the region of 1.20 or even 1.30).