Swiss Franc Retreats; Euro Under Pressure

Article originally published on and republished here with permission

Quote of the day: “Real stupidity beats artificial intelligence every time.” ~ Terry Pratchett

Good morning. Global markets recovered yesterday and the risk sensitive currencies followed, but the best performers were the CHF crosses, such as EURCHF which rallied over 6 big figures after SNB’s Jordan said that they are considering a temporary peg of the franc to the euro. The Swiss franc’s retreat also comes as a result of Gold selling off, reaching session lows into the $1,730 region – just a few hours after touching a new record at $1,815. As noted in my last two daily posts (one, two) – we had some very nice setups in AUD and CHF crosses. It might be a little early to call a bottom at these levels, as the recovery is still modest and we can smell fear from miles away looking at the risk charts (equities, AUD, JPY etc). But it’s definitely worth considering buying dips while being very careful and, of course, using large stops if jumping into these waters, as the daily ranges are like a large group of piranhas.

Now let’s take a look at the charts and see what’s going on

EURCHF – large moves of a few hundred points / day became normal, the 5 days average being 435 points. If you’re one of the 20-pip-stop fans, then you better disregard this cross and look elsewhere. Now that my initial projected target around 1.08 was reached, I’d like to see the recovery extending towards 1.100 where next barrier is located – formed by a falling trendline.

Euro Vs Swiss Franc Daily Chart 8-12-2011Euro Vs Swiss Franc Daily Chart 8-12-2011

The reversal pattern was easier to notice on the 4-hrs chart. A potential pullback from here towards 1.05-1.06 should be a new buying opportunity. Below that region, things would turn ugly (from a bullish perspective, that is).

Euro Vs Swiss Franc 4hrs Chart 8-12-2011Euro Vs Swiss Franc 4hrs Chart 8-12-2011

AUDUSD – Wednesday’s pullback from 1.0390 to 1.0110 was corrective, but we’re still into range. However, on a scale from 1 to 10, I’d rate the chances for this recovery to extend above 1.0400 as 7. Keep in mind that AUD is tightly correlated to major equity indices these days, so it’s all about how the European and US markets perform.

Australian Dollar Vs US Dollar Daily Chart 8-12-2011Australian Dollar Vs US Dollar Daily Chart 8-12-2011

EURUSD – this is just too choppy for my liking. But it’s normal, while bad news are moving over the Atlantic like a ping-pong ball. The party is somewhere else, so it’s not worth trading this – there are better setups to consider.

Euro Vs US Dollar 4hrs Chart 8-12-2011Euro Vs US Dollar 4hrs Chart 8-12-2011

EURAUD – this setup looks good (highlighted yesterday). It could be either a correction towards mid range of last up leg or a full reversal. While holding below yesterday’s top side, bearish pressure should be quite high.

Euro Vs Australian Dollar Daily Chart 8-12-2011Euro Vs Australian Dollar Daily Chart 8-12-2011

EURNZD – same story as above, more or less. Just that it lags a bit behind EURNZD, so keep an eye on the support zone @1.7075. While not returning abobe 1.7460 – all is cool.

Euro Vs New Zealand Dollar Daily Chart 8-12-2011Euro Vs New Zealand Dollar Daily Chart 8-12-2011

EURCAD – here’s another nice setup (highly correlated to last ones above). Weekly bottom is being tested right now, which means that it’s worth selling on weakness – next target coming around the upper limit of last trend channel, also the fib retracement region of the full upward swing from 1.3540 to 1.4230

Euro vs Canadian Dollar 4hrs Chart 8-12-2011Euro vs Canadian Dollar 4hrs Chart 8-12-2011


About abwehra group

The Art&Science of Trading Gold
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