Trade Closed: 2008-09-11 19:11
EUR/CHF continued to declined through yesterday’s Asia and European trading sessions, hitting a low around 1.5840 and closing my remaining position at the adjusted second profit target of 1.5850.
1st Half: +75 pips
2nd Half: +150 pips
Total: +1.125% gain
EUR/CHF quickly found buyers as risk tolerance grew on speculation Lehman may be purchased in the morning US trading session. The Euro also found a bid on comments from European Central Bank Vice President Lucas Papademos commented that the economy likely to dodge recession and inflation risks still remain. So, it looks like the ECB won’t be cutting rates anytime soon, and it looks like I’ll be looking for Euro longs for the time being. Stay tuned!
Trade Update: 2008-09-09 18:33
It looks like EUR/CHF is currently having trouble breaking yesterday’s lows, plus with Eurozone data and Trichet speaking later I’d like to close out a portion of my position to lock in some profits.
Close half position at market (1.5925). Adjusting stop on remaining position to breakeven and target 1.5850, last weeks lows.
Trade Update: 2008-09-08 10:01
Good morning! Well, for those of you who don’t know, the big news story to kick off the week in currency trading came in the form of the US government taking over Fannie Mae and Freddie Mac. Initially, traders bought up equities, higher-yielding currencies and sparked carry trades as markets opened up in Asia. This pushed up EUR/CHF to my short entry orders at 1.6000, but not enough to stop me out as the rallied fizzled just above 1.6050 and EUR/CHF fell lower to its current level around 1.6025. Where to now?
My thought is that while this move by the US government was necessary to saving the housing market from total failure, is the pill to fix it all instantly?
With the government take over of the GSE’s, we may see lending standards tighten up more, possibly making it more difficult to get a home loan in the near future. Bad for the housing market, right? A continued fall in housing prices and more foreclosures to come? Maybe and if the housing market continues to suffer, the economy will continue to suffer as will investor confidence. If traders lose confidence again, it’s back to risk aversion and back to the downtrend in EUR/CHF.
So, based on the idea that this is a short term reaction and that we may see traders go back to risk averse behavior, I will hold onto my short position for now and continue to watch how traders process and price this event out, as well as Euro and Swissy events, over the next few days. Stay tuned!
Trade Update: 2008-09-04 13:40
As expected, the ECB interest rate decision was the deciding factor on whether or not we would see a break in support. Trichet’s surprise dovishness was the catalyst that sent the Euro down against the majors, and pushing EUR/CHF below support around 1.6000.
Well, the pair has fallen quite a bit, currently trading around 1.5900. I am going to continue to watch to see if we’ll get a pull back before jumping in. I particularly like a short at 1.6000. For now I will:
Short EUR/CHF at 1.6000, stop at 1.6100, pt1 at 1.5900, pt2 at 1.5800
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
Stay tuned for updates!
Good morning! We have a possible trade opportunity as the recent decline in the Euro against the Swiss Franc has brought the pair back to a major support level. Will it hold or break? The ECB interest rate decision may be the deciding factor…
I have a simple daily chart on EUR/CHF, and we can see the pair has been in range bound mode for pretty much the whole summer. The pair has dropped due to several factors (slowing euro zone economy, carry trade unwinds, etc.), and now that it’s back the major support, will it hold?
The ECB interest rate decision tomorrow may give us a short term answer. Analysts widely believe that the ECB will hold rates at 4.25%, but the rhetoric after may be the deciding factor. A statement focusing on a economic weakness could send the Euro lower across the board and break support in EUR/CHF.
I have no trade idea planned for now, but I will continue to watch this pair closely and see what happens after the ECB interest rate decision tomorrow at 1145 am GMT.