CHFJPY Range Bound Following Break In Bullish Trend

A breakdown in a major bullish trend suggested the Swiss Franc / Japanese Yen pairing was due for a period of consolidation. This has started to occur, and the mild calendar for the rest of the week offers a good argument for more of the same.

Trading Tip - A common cliché among traders holds that 'the trend is your friend.' When applied to range trading through periods of consolidation in an otherwise trending market, this means only entering a trade in the direction of the trend. In particular, we will opt not to buy CHFJPY even though the pair is trading close to the bottom of the range because the direction of the recent breakout was to the downside. We would rather miss out on a trade and lose nothing than get long counter-trend if CHFJPY simply sinks lower from here without oscillating to the 50% Fib.

Note - Today's market environment is not conducive to a range-bound approach with most pairs trending. Finding a range trading opportunity often means relying on exotic crosses and thereby contending with higher volatility levels. Conservative traders that are intent on following a range-bound approach should be mindful of this when evaluating these trade ideas.

Event Risk for Switzerland and Japan

Switzerland - With Consumer Price Index figures out of the way, the Swiss calendar has become substantially lighter for the rest of the week. The only remaining item on the docket is Thursday's jobs report. Expectations are for the rate to remain at a consistent 2.5%. Traders will be wary of this ticking higher as the Euro zone exports the effects of the US malaise to the mountain nation.

Japan -Friday's release of the preliminary estimate of the Leading Economic Index for March is the only substantial release from Japan this week. Expectations are for a sharp decline as the Japanese economy suffers high oil prices and the loss of vigor in the US export market.

DailyFX

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