Once again the subject of intervention is making its way around. This one is relatively believable because it involved the Swiss Franc. For better part of this year, Swiss National Bank has been warning about and threatening with intervention. As far as we know, they delivered on these promises at least three times so far. While central banks, in very clandestine fashion, always refuse to comment on intervention rumors, the Bank for International Settlements is normally institution which carries it out, so some info filters down. SNB has been claiming that strong Franc is harmful for Swiss economy, using EUR-CHF as a proxy.
Few hour ago we witnessed another of these one sided, exaggerated moves in all Swiss Franc pairs, with EUR-CHF being most active. This would be a hallmark of intervention, the way it has been playing out this year, with one exception- move was a little smaller than before. True to form, SNB refused any comments, claiming it does not not respond to rumors and market talk. So far no word from Bank for International Settlements, either. However, given the fact that no CHF pertinent announcement was scheduled and nothing else hit the wires, one can say another intervention took place, if this distinction is needed.
Last week I took couple of long trades in EUR-CHF, which turned out to be loosing ones. That was covered in the post about Canadian Dollar. Yesterday I started to look for another entry to go long this pair. It was found at 1.5130, at last minor high. Moves have been relatively slow in this pair, there was reason to believe something would happen fast and I was going to post this order in the blog today. Too late for that.
Couple of hours ago price suddenly shot up, taking out my order. It swiftly reached objective of 1.5220, which really surprised me. I considered that target to very ambitious, relative to recent volatility. Well, was I wrong. Pleasantly wrong, as it turned out, as my target has been breached in about 30 minutes. Courtesy of Swiss National Bank. Thank you. On a more sobering note, it should be noted that these interventions don’t really produce any lasting results. Once the action stops, price slowly gravitates lower. This very much reminds me of BoJ actions in 2003-04 when for a few months market forces kept the prices at just above 100 for USD-JPY in spite of constant meddling by Japanese authorities. How much longer will EUR-CHF remain in this 1.50-1.55 band?
Another adjustment was made to a buy order in EUR-NZD. This pair has been featured in a Price action Forex trading post. Idea is to use only high-lows for trade and its management once it is under way. Market will determine just how long it lasts, with no set objective. I’m using 4H charts for this demonstration, so entire process will take some time. Chart above illustrates where the previous buy orders were and how they’ve been adjusted. Last one came within few pips of been filled, but it is moved to 2.0440 now.
Japanese Yen snapped sharply earlier on in the week, prompting all kinds of speculations about what is next. Personally, I don’t know what is next. Theories abound and plays keep changing in my head, but first some viable trading set ups must present themselves. Right now things look different not only from one JPY cross to another, but also from time frame to time frame. In other words immediate future is murky, or rather without many clues that I can interpret. This applies to the 1H and 4H charts.
This here pair, EUR-JPY is a good example of market indecision. Currently price stalled right in the middle of the range established on during Sunday rebound. Right now it is difficult to say it it was an important bottom, or simply a corrective move in a down trend. Since the down trend has not been broken yet, selling would be logical here under 130.60, with objective to about 129.80 or so. However, I want to observe price behavior, especially if it gets again close to 132.00 and 100SMA. Should it go through, it becomes a buy with about 150 pips objective. While on the subject of JPY, I will have some observations about its behavior on Sunday. Most likely in the next post.
Great timing, few hours before intervention. Did you also buy gbp-chf and/or usd-chf?
Yen is shaky, just like my views at the moment. Not much is going my way this week. Can’t wait for next post and see what is so interesting about Sunday, or last Sunday.
No, Ray, only EUR-CHF. Had I known intervention was coming, than yes, I would have bought everything.
Very interesting point about effectiveness of intervention. For all the talk about it SNB has not accomplished much and commited probably huge amounts of money to the cause. If anything, price is slowly creeping down and eur.chf becomes un-tradeble. They are fetting less and less bang for their buck.
Do you really think that Yen pairs will move up from here?
Like I said in the post, don’t know. Move down is a little more logical, but has smaller objective. Price has to “tip” its hand.
[...] For better part of this year I have been writing, among other things, about Swiss National Bank intervening in the currency markets. Among the many central banks that talked and threatened with intervention, SNB[...]