- Near term EUR/CHF is probably trapped between 1.20 and 1.25. 1.20 = SNB floor and magnet taking brunt of EUR selling pressure. 1.25 = expected new floor if SNB chooses to ease policy next. Until it (SNB) actually does, risk reward considerations probably favor long CHF > 1.235 and short CHF < 1.215. [Notice after the initial flurry post-SNB announcement of unchanged policy today, the cross is settled trading near a neutral 1.2250].
- Core view here is Risk Off = long USD, expressed in various ways.
- Useful to reduce sensitivity to USD by toggling short EUR/USD and short EUR/CHF opportunistically (via USD/CHF) So far, 2 attempts - 1 failed (-0.9333 / + 0.9358) and 1 successful (-0.9525 / + 0.9422). Entries were based on EUR/CHF location at the time.
- Technicals for USD/CHF look interesting too, and suggests it is probably not insensible to try to sell USD/CHF.
- Monthly : Big downtrend, being retraced about 50% now, so pause or pullback (down) could reasonably be expected.
- Weekly : Clearly identified 5 waves up, again suggesting positioning for a down move does make some sense. Trade against today/local high of 0.9547 as stop point.
3 comments:
Short USDCHF = weakening USD = risk off? That goes against the other trades, short EURUSD, short GBPUSD. Don't follow copper so can't say anything there. Your thoughts?
Pandu
Keyword ... HEDGE
Perhaps I explained it badly in my post. What I was trying to say is basically - if EUR/CHF is above 1.2350, it's probably better to be short EUR vs CHF instead of vs USD. To convert core short EUR/USD to short EUR/CHF, you need to sell USD/CHF.
In this way, one reduces exposure to long USD risk as well, as is sometimes desired when Risk Off has gone to extreme.
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