- Crap market. Equally crap trading here. I keep asking myself - could I have caught this Risk Off move from looking at my charts? Unlikely. Short term reversals are not my game. Longer term trends are. But I need follow through to make money.
- Initial short at 0.9070. Added on at 0.8982 as downside momentum appeared to gather strength on chart. Damn! Overall position out of money (due to the pyramiding) again!
- Bernanke no hint of QE3 last night unleashed torrent of Risk Off activity that has pushed USD/CHF to a high of 0.9071 so far.
- Fortunate to have scratched the long Ten year position at 131-06 last night (ZNM2 low 130-11.5 today) so I can focus solely on managing this one. Better not to have to many balls in the air when its not going well.
- Still reading this as daily SHS top and this move, however irritating, is merely a pullback for those with bullets to add on. Nothing done here. The weekly chart is little affected by this current uptick.
- Convinced we'll see 0.8560 in time. Trick is how to stay alive for the move.
- Last week, EUR short squeeze pushed it firmer against almost everything else, and yet the CHF was able to gain from 1.2084 to 1.2050. Price action reveals a lot about sustainablity of CHF strength.
- EUR/USD strength has much to do with recent higher oil prices. ECB single inflation mandate (unequivocal tightening) vs Fed dual mandate (likely easing) = asymmetric monetary policy response expected.
- Watch EUR/CHF weekly chart closely. In the last 7 weeks, price action has come to a virtual standstill below 1.2120. Market clearly wants to test the SNB's resolve to hold the floor at 1.20 but needs a catalyst to provide cover. Perhaps another EU flare up, this time involving one of the other countries now that Greece is temporarily put aside. If the CHF can hold its own during a period of generalized EUR strength, imagine what would happen when the EUR is under severe pressure.
- Am prepared to go with a break below 1.20 here.
- Finally, something appears to be working here. But lesson re-learnt, being very careful with pyramiding so as not to get into trouble again.
- Daily chart is most interesting. Huge SHS top (with a double top making the head). Neckline around 0.9080; top at 0.9600, ie downside objective is at 0.8560.
- Surprise surprise, this coincides almost exactly with the previous 4th on the weekly chart, increasing its importance somewhat.
- Under current circumstances, short USD/CHF is almost the same as being long EUR/USD.
- This was a good trade that I had managed badly earlier. Originally short at 0.9183 and 0.9255 but got out way way too early in my hurry to get fully Risk Off.
- Ordinarily I would have sold on first break below 0.9090 today but I froze due to lack of confidence. Watched it make a low of 0.9037, before initiating my short on a pullback, to 0.9070.
- This is a short on basis of bearish patterns on weekly and daily charts. First downside target 0.8560.
- Initiated fresh short @ 0.9183 today.
- Monthly : Big down. Upmove = retracement, over?
- Weekly : Completion of clear 5-wave up. Re-entry below 0.9326 NL = sell signal which I missed whilst busy with other markets. Most recent 3 weeks' price action looks like a bear flag. Expect a return to 0.8568.
- Daily : Double top. Sell signal formed when it first broke below 0.9300 NL.
- Keeping this really small to reserve room to add on if ever we return to the necklines (0.9326 and 0.9300). I want to be adding on with confidence then instead of scrambling to get out.
- Risk Off book performing, mostly from cable and EUR/USD, which is good as the 2 account for >70% of core book risk.
- Have just sold USD/CHF at 0.9533 (+SFH2 @ 1.0477), in half the short EUR/USD amount, thus turning half of EUR/USD short into EUR/CHF short.
- This achieves 2 objectives for me. 1. I want to reduce some of my naked long USD risk. 2. I think EUR/CHF is a good trade from a technical viewpoint as long as we stay below 1.2150. P&L volatility should be reduced from Risk On/Off swings provided the SNB does not spring any big surprise on the peg.
- [Weekly USD/CHF looks like in 5th wave of rally so worth a shot on the short side - though not something I would ever want to try on an outright basis]
- Attached chart = EUR/CHF daily. Looks very much like a topping price action. In addition to EUR weakness, one wonder if perhaps "insider trading" suspicions of the EUR/CHF floor's chief architect might perhaps contribute to the chart performing on the downside. Had previously planned to be buying EUR/CHF near to 1.2150 but have now changed my mind and gone the other way instead.
- Have today :=
- 1. taken profit on 25% of short EUR/USD 1.2680.
- 2. switched 25% of short EUR/USD to short EUR/CHF by selling USD/CHF at 0.9594 (almost high of the day). [Actual trade = Bought SFH2 @ 1.0433].
- 3. Balance of 50% - still holding (direct short EUR/USD).
- Markets tend to always want to challenge central banks' line in the sand. Buy more CHF if we close convincingly below 1.2130. Since day 1, I had thought the SNB move was foolish.
- 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.
- Risk Off positions all performing, moving nicely deeper into the money today after last Friday's EU fiscal union intentions (good news exhausted, now only bad news to come).
- Short EUR/USD, short Copper and short Corn all, to some extent, are the same as being long USD. Think all these have a lot more potential so not willing to reduce risk to lock in profits. In fact, have sell stops to increase directional long USD bets in place.
- To reduce P&L volatility somewhat, have just gone short USD/CHF as a hedge. Fully aware that this has potential to blow up in my face if indeed the SNB does raise its EUR/CHF floor from 1.20 to 1.25 later this week as many are expecting. (Last around 1.2350).
- Current levels on daily and weekly charts now at good technical resistance. Will be quick to abort this hedge on early signs it is not working. This is NOT a structural trade.
