• The Swiss franc against the Japanese yen is a very interesting pair.
• It is a measure of extreme weakness with both currencies.
• They’re both what are known as funding currencies, meaning that carry traders who take advantage of swap at the end of the day.
• The differential than bond yields prefer to short these markets or sell these currencies in order to make profit in other currencies, such as the British pound, the Canadian dollar, and the U S dollar.

This is always an interesting chart for me to watch because it tells me which currency I want to start shorting against other ones. It’s not even necessarily an idea of trading this particular market. However, it’s not to say that you can’t.

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Remember the Swap

It’s not to say that you don’t get paid at the end of every day to hold Swiss francs over Japanese yens. At this point, the market pulling back at this juncture could see a significant amount of support at the 171.50 yen level, where the 50-day EMA is starting to race toward. I think at this juncture, we have more of a buy on the dip attitude if you’re going to play this CHF/JPY market.

But this chart also tells us that you want to be short the Japanese yen against most other currencies. You could of course short the Swiss franc as well, but really at this point, it looks like you’re going to get more bang for your buck shorting the Japanese yen from what this chart is telling us. If we can break above the 175.50 yen level, then it becomes more of a buy and hold market going forward. This has been the way for quite some time, and it’s worth noting that taking out that level would wipe out the intervention candle that the Bank of Japan formed in the markets.

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