Start of Forex trading was very brisk this week. Currencies opened with fairly sharp moves, reversing them in matter of hours in most crosses. In some instances it was only couple of hours. Gaps were present, too. Not everywhere and not very big, but quite a few of them happened. Some were playable, wide enough to place trades. As luck would have it, they also happened in the currency pairs discussed in last post, AUD-CHF and EUR-NZD, which made for entertaining trading day. More about it later.

As far as I’m concerned, news of the day came from Switzerland.  Apparently SNB is once again displeased with strength of Swiss Franc. President Philipp Hildebrand said policy makers will seek to prevent “excessive appreciation” of the currency. In other words, CHF has become too strong for their liking, especially against the Euro. As always, no specific level was mentioned, just the “concern”. In short, this is a threat of intervention, like they did last year. Clearly, though, SNB is as not as serious as before. Why? Well, they would have done it already. The fact that they are trying to “talk the market” into submission means softer approach is taken this time, much like the Bank of Canada. Of course, Swiss National Bank carries more credibility because they have actually done that, unlike BoC. At any rate, this is something to keep in mind for days and weeks ahead.

This brings me to one of the trades mentioned yesterday, a sell in AUD-CHF. As mentioned before, this pair opened with a gap. It wasn’t very big and typically I would have passed on it, in favor of bigger ones. However, since this was a cross with possible trade in, I traded the gap. Since it was relatively small, I zoomed in to smaller time frame, 15M, in order to identify possible reversal faster. This could have resulted in a premature entry also, but not this time. All said trade produced 30 pips, a little more than the gap, but I didn’t see a reason to go for less. After all, my bias here is bearish, so why not?

I did, however, cancel my original sell order at 0.9435. There were many other trades at the time, including longs in EUR-CAD and GBP-CAD, which I have been on the lookout for since last week. I’m passing on this one. No reasons to worry about what SNB might or might not do. Plenty of other opportunities.

The other pair of interest from yesterday, EUR-NZD, also had a gap. This one was much bigger and produced better results, 45 pips, on the first move above minor high using 15M charts. Here my original buy order at 1.9640 stands. On this platform price came within either 1 or 2 pips to entry, but no fill. Highest bid was at 1.9632, spread either 6 or 7 pips, so order was just missed. It is still valid, at least for now.

Last possible trade from yesterday post involved CAD-JPY. Was seeking a gap here, which didn’t happen. AUD-JPY had one, too small to trade though. At any rate, with my bearish bias towards Canadian Dollar, I shorted it at 89.70 and closed for +50 pips, close to next support. Breaking this level will trigger next sell with 90 pips objective. Price dipped to 88.91 since I started to write this update. My idea is to see a bounce around this area, doesn’t have to be a big one, as long as another support point is established, and sell next move down. Entry will probably have to be adjusted by few pips, very likely not the 88.90 indicated on the chart. But close.
As mentioned at the end of previous post, and earlier in this one, there were breakouts in EUR-CAD and GBP-CAD. They produced good trades, which I’ll cover in next update. Also, will look at the Pound. Will today’s strength become longer lived?

Mike K.