The Swiss Franc has risen against the Japanese yen on Friday, as traders will look at this as a major signal.
CHF/JPY
The Swiss Franc has rallied significantly against the Japanese Yen during the trading session on Friday to threaten the idea of a major breakout yet again. This is a pair that I'm watching very closely because both of these are currencies that people will use for carry trades.
Ultimately, I think this is a situation where we might have a major breakout against the Japanese Yen everywhere, and if the lowly Swiss Franc can do it, that tells you a lot. That tells you that the Japanese Yen is in serious trouble.
Technical Breakout and Targets
If we do break above the 204 Yen level, I believe that the Japanese Yen is in serious trouble against a multitude of currencies. But the Swiss Franc itself, based on a measured move, could go looking to reach the 210 Yen area. Over the longer term, I do think that's a very realistic target, but I also recognize that you can make an argument that the pair may have to pull back in order to attract buyers.
Ultimately, I do like the idea of buying this pair on either the breakout or the pullback because I think it does offer quite a bit of opportunity. The 50-day EMA currently sits just below the 200 level, and I think the 200 level in this pair is likely to be important for some time ahead.
With this being the case, it's really not until we break down below there and the 198 Yen level that I would become concerned about the trend. In that environment, you probably see the Japanese Yen strengthen against almost everything at the same time. While I don't anticipate that happening, it is something to keep in the back of your mind.
If this pair breaks the 204 Yen level, I will then not only buy this pair, but then I'll start looking at the British Pound against the Japanese Yen, the US Dollar against the Japanese Yen, and so on.