Overextended and Overpriced?For now, the safe-haven demand for the Swiss franc has bolstered its strength, especially amid the recent political turmoil in Europe. But once the geopolitical concerns have subsided I think the safe-haven rally will weaken. …and with it the price, which I expect to take a natural retracement. Whether this will be enough for a bearish reversal, I do not know. But I’m looking for potential signs of weakness to cement my position.
Technically, the price is moving within the confines of a large rising wedge which in itself indicates the potential for bearish activity on the horizon but I’m not really seeing much technical divergence. The price action is currently overextended and overbought but this in itself is not a sufficient reason to sell this pair. Add to this the fact that as many as 95% of retail traders are currently net short, I believe an argument could be made for a continuation of higher prices. Any trades taken at or near all-time highs should always be taken with caution so it’s with this caution that I’ve entered a sell at 178.66 with a view to scale in positions if weakness presents itself.
