The Swiss francs and Hungarian forints pair is a very exclusive instrument. It is difficult to find an analyst or expert who would recommend considering it in the long term. And there is a logical explanation for this.
Switzerland is a country whose economy is 65% dependent on the banking sector. Due to one of the most stable currencies in the world, the country attracts billions of investments, but in regard to production, indicators are low.
Medicines and medical equipment, chocolate and cheeses are the main part of export. High-tech production in the country, although developed, does not make up a significant share in GDP.
The main strength of the franc is the negative interest rate that the National Bank often uses. In such a situation, any other currency will look promising against the background of CHF.
As for Hungary, according to the official website of the Ministry of Economy, more than 2/3 of GDP falls on tourism and services. The country has developed agriculture, especially the wine sector.
From 2010 to 2016, Hungary improved most of its economic indicators by four times. As of 2018, the country has attracted 71.6 billion dollars of foreign investment, which is the best indicator among the countries of Eastern Europe.
But in reality, all this is not enough to consider the Hungarian forint as an interesting trading asset. The currency does not have a strict pegging either to the banking sector nor to the agrarian or industrial.
This makes it quite unstable and high-risk. It’s difficult to apply the rules of technical analysis to it, any news can dramatically affect the situation and reverse the trend.
At the same time, high volatility allows traders to count on a good spread. The most striking event in the pair happened in 2011 when the Swiss National Bank canceled the pegging to the euro. Over the next few days, the exchange rate rose by 5,000 points.
A single right strategy for trading CHF/HUF does not exist since the forint is very volatile. Due to the high emission of currency, fluctuations can reach 500-1000 points within a month, but in real money, these indicators look much worse.
Therefore, it is worth choosing the Swiss franc as the dominant. Its fluctuations are more predictable and can be analyzed using technical indicators.
To conduct a deal, it is necessary to determine the estimated bottom within the daily and weekly charts. For this, you also need to analyze a monthly chart that will show the direction of the current trend.
The CHF/HUF pair is characterized by a tendency where the franc rises in price over a long period, then sharply falls and in a couple of days begins a new round. Therefore, trading involves active steps from traders.
The data obtained from the charts are used to determine resistance lines in the framework of the daily trading session. Fluctuations for this time interval can be in the range of 500-800 points, but the deal should be opened in the medium term with the prospect of 3-4 days.
Given the economic circumstances characteristic of both countries, it is obvious that during an unstable economy, the franc grows stronger and the forint weakens. In such circumstances, transactions with an eye for several months ahead will also be interesting.
In many ways, this situation depends on relations between the United States and China. At parity, investors will buy dollars and yuan to invest in an emerging market, but in the face of confrontation, they will be forced to look for storage instruments, one of which is the Swiss franc.
In turn, a drop in international trade will lead to a decrease in Hungary’s GDP, this will entail a change in the monetary policy of the national bank and a depreciation.
The pair is very controversial, so it is mainly used for general analysis of the situation in the European and international economy. But those traders who prefer to participate in adventurous transactions can choose this instrument and earn good margins at sharp jumps in the exchange rate.