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Trade Idea Invalidated: 2010-08-31 10:05

PoD Chart

Ha! So much for double bottoms! Neckline resistance held, and EURCHF has just made new lows!

I didn’t expect the euro to tumble so much to start the week, especially with London traders having the day off on Monday. The pair continued its strong down move and is now treading below the 1.2900 handle!

It appears to me that traders are still risk averse… otherwise, they wouldn’t keep buying up the franc! Perhaps it’s time to shift bias and look for more short euro plays. Maybe if EURCHF retraces and tests former support, that could be a good short play? Hmmm… time to reevaluate.

Trade Idea: 2010-08-30 12:45

PoD Chart

Check out those double bottoms on EURCHF. Mighty sweet eh? What’s my game plan? Well, I don’t want to be too hasty and enter at market as it seems like the EURCHF is still testing the neckline resistance. I will have to wait and see what happens over the course of the next few days before making my decision.

Looking at the the economic calendar, it shows that both the euro zone’s and Switzerland’s schedules are empty for today so there isn’t any economic catalyst for a breakout just yet. But, looking further into the week, I’ve got my eye locked on those high-impact releases from both regions.

A bunch of economic bombshells are set to explode on Thursday and these could provide a boost for EURCHF. The ECB is set to make its interest rate decision then and, although the central bank is expected to keep rates on hold, the accompanying statement could highlight the recent developments in the euro zone.

Meanwhile, Switzerland is gearing up to unload its GDP and retail sales reports on that day. Swiss GDP is expected to have risen by 0.8% in the second quarter, twice as much as the 0.4% growth seen during the first quarter of 2010. Retail sales are estimated to climb by 2.3% but if the actual figures fail to meet expectations, the franc could chalk up some losses.

Of course, let’s not forget the ever-present possibility of currency intervention by the SNB. I doubt they’ll just sit back and let this pair drop below 1.3000. If they do decide to intervene, then KABOOM! Potential pips for Cyclopip!

For the meantime, I’ll sit back, relax and enjoy a can of beer while I watch the charts.

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