Markets Recovering, Swiss Franc Out of Control

Article originally published on and republished here with permission

Quote of the day: “Society, my dear, is like salt water, good to swim in but hard to swallow.” ~ Arthur Stringer

Good morning. Some huge moves have taken place yesterday especially in CHF pairs – EURCHF collapsing to as low as 1.0065 – a few pips away from parity, from earlier top at 1.0800. That’s a 770 pip range in 24 hours. USDCHF did the same, yet the daily range is “smaller” – if we can call it that way – “only” 520 points. The huge decline came as 1st market reaction to the FOMC statement. Basically, the Fed promised to keep rates near zero until mid-2013 (“exceptionally extended”). What was really interesting about this FOMC statement is that there were three dissents – Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser – all three were hawks. There was no mention of QE3, but here’s Goldman’s take on the statement and here is a very interesting chart on this matter. Time will tell whether more easing might come from the Fed and how it will be called – suspecting that it will have a different name next time.

Now let’s take a look at the charts and look for trade opportunities:

First, AUDUSD – which followed the equity market indices: the long tailed candle highlighted yesterday is valid and can be seen on the weekly chart, too. From a technical perspective, it is a very strong sign of reversal, therefore buying this dip is one thing to consider.

Australian Dollar VS. US Dollar Daily Chart 8-10-2011Australian Dollar VS. US Dollar Daily Chart 8-10-2011

The short-term reversal / mid-term trend continuation patters can be seen from a plane on the weekly chart, too:

Australian Dollar VS. US Dollar Weekly Chart 8-10-2011Australian Dollar VS. US Dollar Weekly Chart 8-10-2011

And here’s the S&P 500 chart, you can compare it to the daily AUDUSD – as you can see, the correlation is very strong

S&P500 Daily Chart 8-10-2011S&P500 Daily Chart 8-10-2011

EURUSD: still in range but it’s most likely going to exit soon. A trade opportunity I am currently considering is to go long on a break above yesterday’s close at 1.4380, with a target at 1.4500

Euro VS. US Dollar 4hrs Chart 8-10-2011Euro VS. US Dollar 4hrs Chart 8-10-2011

EURAUD – last rally from 1.29 was impressive and yesterday’s candle suggests that an end of EUR’s appreciation is in place. There’s interim support @1.38 and a break below this level could be a good opportunity to sell it, with an initial target into the median zone of last up leg

Euro vs Australian Dollar Daily Chart 8-10-2011Euro vs Australian Dollar Daily Chart 8-10-2011

EURCHF – this pair is behaving out of control but it just found a minor support near parity yesterday. It seems that we have a bottom now and this recovery has a good chance to extend to as high as 1.08 (former support zone). If you like pushing your luck from time to time, trying to catch a falling machete – then this could be the right time to consider it.

Euro Vs Swiss Franc 4hrs Chart 8-10-2011Euro Vs Swiss Franc 4hrs Chart 8-10-2011


About abwehra group

The Art&Science of Trading Gold
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