BKSWING – New AUD/USD, NZD/USD and EUR/CHF Orders

Swing

Chinese GDP numbers are scheduled for release tonight and it is the most important event risk this week. Chances are the data should show a slowdown in China’s economy but when it comes to Chinese data, it can be subject to manipulation so we want to be positioned both ways. At the same time, we want to revive our EUR/CHF buy on dip trade that was canceled last week.

1. Place order to Buy NZD/USD at 0.8027
Stop at 0.7967
Close 1/2 at 0.8057, move stop to breakeven
Close rest at 0.8185

2. Place order to Sell AUD/USD at 0.8616
Stop at 0.8676
Close 1/2 at 0.8586, move stop to breakeven
Close rest at 0.8450

3. Place order to Buy EUR/CHF at 1.2055
Stop at 1.1995
Close 1/2 at 1.2085, move stop to breakeven
Close rest at 1.2200

***Remember, if 2 orders trigger without one hitting T1 first, all other orders are canceled

Buy EUR/CHF on Dips

Buy EUR/CHF on Dips

Chart Of The Day

Buy EUR/CHF on Dips

Fundamentals

The fact that EUR/CHF is trading back below 1.21 makes it an attractive buying opportunity. We have bought EUR/CHF on dips between 1.2045 and 1.2085 numerous times over the past 2 months and there’s very little reason for our initial views to change. The Swiss National Bank maintains a 1.20 EUR/CHF peg and as recently as this past Friday, central bank governor Jordan pledged to enforce their minimum exchange rate. More importantly he said they would not exclude bringing interest rates to negative levels if necessary. With the ECB planning to boost stimulus, the SNB will probably need to resume purchases of EUR/CHF if it drops to a fresh 2 year low below 1.2045, which is why we think any dip towards that level presents an attractive buying opportunity.

Technicals

Technical analysis on EUR/CHF is not very reliable because of the distortion created by the threat of SNB intervention. Nonetheless, the September low, which also happens to be the 2-year low at 1.2045 is the key level to watch. We firmly believe that this level will hold. If EUR/CHF moves higher 1.2140 will be resistance.

EUR/CHF – Position for a Bottom

EUR/CHF – Position for a Bottom

Chart Of The Day

Fundamentals

EUR/CHF dropped to its lowest level in 1.5 years today as the conflict between Russia and Ukraine takes a greater toll on the currency pair. Economically, the Eurozone has been directly affected by international sanctions on Russia, which triggered a retrenchment in demand for European assets. The Swiss Franc on the other hand has been a big beneficiary of safe haven flows. On top of that, inflation in the Eurozone is falling, triggering concerns from the European Central Bank. Since the beginning of August, there has been growing speculation that the ECB may increase stimulus further with possible action early next week. However we believe that this is unlikely because parts of the program they introduced in June have not been implemented yet and furthermore, the Swiss National Bank has pledged to keep EUR/CHF above 1.20. For this reason, we expect the currency pair to find a bottom soon as the risk of intervention increases with every 10-pip decline in EUR/CHF. Even if the SNB starts with verbal intervention, it could be enough to reverse the decline in the currency pair. So positioning for a bottom in EUR/CHF near current levels with a stop below 1.20 may not be a bad idea.

Technicals

Technically, EUR/CHF is clearly in a downtrend with the break of 1.21 opening the door to a move down to 1.20 but technicals matter little when the central bank commits to a floor. On the upside, if EUR/CHF rises back above 1.2120, the downtrend would be negated.

Will EUR/CHF Spike on SNB?

Will EUR/CHF Spike on SNB?

Chart Of The Day

Fundamentals

The Federal Reserve is not the only major central bank with a monetary policy meeting on the calendar this week. The Swiss National Bank will also provide its quarterly monetary policy announcement. A small subset of investors believe the Swiss National Bank could cut interest rates after the European Central Bank’s easing and if they are right, EUR/CHF will spike towards 1.2250. However we think the chance of that happening is extremely slim. The last time we heard from the SNB, they reiterated their pledge to defend the 1.20 EUR/CHF floor and lowered their inflation forecast for 2014 and 2015 by 0.2%. With inflation ticking upwards and the unemployment rate declining, as long as EUR/CHF holds comfortably above 1.20, the SNB won’t do more than reiterate its unwavering stance to defend the currency because some Swiss interest rates are effectively negative. Furthermore, a strong housing market and ample liquidity minimizes the need for additional policy action. Nonetheless if the SNB chooses to surprise the market with a rate cut, it will lead to a sharp increase in volatility for EUR/CHF.

Technicals

When you’ve got a central bank artificially intervening in the currency market, technical levels carry less significance. As shown in the daily chart of EUR/CHF, the currency pair is trading between a number of key Fibonacci retracement levels but the main levels to watch are the March 3rd low of 1.2105 and the April high of 1.2250. We don’t expect EUR/CHF to break either one of these levels in the short to medium term.

EUR/CHF – Back to the Bottom of the Range?

EUR/CHF – Back to the Bottom of the Range?

Chart Of The Day

Fundamentals

Today’s sudden reversal in the EUR/CHF suggests that the pair ma have run out momentum ahead of the next week’s ECB meeting as traders may be starting to price in the prospect of possibly lower ECB rates. Although we remain sceptically that the ECB will go “negative” as that could prove to be be both a political and financial challenge the EU governing council members may feel they have no choice but to lower rates perhaps another 15 basis points as US rate continue to tumble and euro rises against the dollar. The ECB is very adamant at keeping the rate below the 1.40 level and lower the benchmark rate may be the only way for them to do it. Therefore today’s downward pressure may be signaling that dynamic and the pair could probe the 1.2150 and possibly even the 1.2100 as a result.

Technicals

Technically the 1.2250 level remains the cap in the EUR/CHF range and the move lower now opens up the prospect of test of 1.2150 and possibly even a break towards the 1.2100 level as the downward pressure on the pair accelerates.

EUR/CHF Can It Clear 1.2250?

EUR/CHF Can It Clear 1.2250?

Chart Of The Day

Fundamentals

Ever since bottoming out below 1.2150 EUR/CHF has slowly climbed back the crisis in Crimea faded off the front pages. The ease in risk aversion has certainly helped the pair, but it may now face a new hurdle as traders begin to price in the prospect of ECB easing. The latest rumors to swirl around were that the ECB has modeled a possible 1 Trillion euros worth of QE, although no official has confirmed this story and so far the central bank remains stationary as to its policy intentions. Next week the calendar is relatively quiet, but if the market continues to focus on possible ECB easing then the EUR/CHF pair is clearly stalling at the 1.2250 may turn and begin to test the recent lows set earlier this month.

Technicals

The 1.2250 level remains critical to any near term breakouts for the pair as it appears to have made a double top at those levels. The break above however could open a run towards the 1.2350 target while a failure cold lead to a retest at 1.2150

Will EUR/CHF Break 1-Year Lows?

Will EUR/CHF Break 1-Year Lows?

Chart Of The Day

Fundamentals

Since the beginning of the year, EUR/CHF has been in a strong downtrend that has taken the currency pair to a one year low. A quick look at a EUR/USD chart will show that the sell-off in EUR/CHF has been driven not by euro weakness but rather Swiss strength. Demand for the Swissie has been fueled by the growing geopolitical uncertainty, concerns about slower Chinese growth and the recent liquidation in equities. In a nutshell, the sell-off in EUR/CHF has been caused by risk aversion. So the question of whether EUR/CHF will break 1 year lows is basically a question of whether the situation in Crimea escalates over the weekend with the referendum vote. If it does, EUR/CHF could drop below 1.21. However traders need to be cautious ahead of 1.20, a level that the Swiss National Bank has pledged to defend repeatedly. With inflationary pressures falling further and retail sales growth slowing the central bank has every reason to want to keep EUR/CHF above 1.20.

Technicals

From a technical perspective, EUR/CHF is clearly in a downtrend with the swing low of 1.2105 as the closest level of support. If this level is broken the next level to watch is 1.2030. If EUR/CHF starts to turn higher, 1.2220 should be resistance.

EUR/CHF – Breaking Down?

EUR/CHF – Breaking Down?

Chart Of The Day

Fundamentals

Although everyone knows that the Swiss National Bank has a floor underneath EUR/CHF at 1.2000 the pair has been creeping ever so slowly lower towards that level and just recently broke the key 1.2200 support level. The pair has been under pressure as the crisis in Ukraine reawakened so risk aversion fears and the eco data in US has been disappointing providing no support for USD/CHF. On Monday the market will get a glimpse of the of German IFO data and chances are the numbers may miss their mark as the decline in EZ flash PMIs and the drop in ZEW suggests that eco activity in February has slowed. If that is indeed the case the euro could come under renewed downward pressure and pull EUR/CHF towards the 1.2150 mark is it slowly approaches the key 1.2000 floor.

Technicals

EUR/CHF has been in a very long 1.2200-1.2500 channel spanning several years. Every time it has approached the 1.2100 level the pair has been able to rally, but if support is broken the cascade of stops could accelerate the momentumto a true test of the 1.2000 level.