Swiss National Bank has its regularly scheduled monetary policy meeting tomorrow. No interest rate changes are expected, but everybody is interested in possible easing on intervention threats. Economic numbers from Switzerland are much better than EU. Recession was much milder, and so far economy seems to be recovering faster than in Eurozone. Rumors fly that SNB will put an end to selling CHF. Surely it will not be spelled out like that, but language of the announcement is supposed to provide clues. They are most concerned about EUR-CHF exchange rate, however, should Franc respond to the news, it will likely be in all its pairs.

Couple of days ago, when I was writing last post, Japanese Yen pairs formed a decent rounded top on hourly chart. Rounded tops tend to be reliable reversal patterns. The term “reversal” is a little unfortunate. Just like most other chart patterns, they don’t necessarily indicate an all out reversal, but correction, or at least a pause in prevailing trend. They are typically good for one swing down under base of the pattern. Base is defined by connecting two lowest points on both sides of the top. Simple move under that level indicates possible sell.

Most JPY pairs looked like this and I took couple of trades in them. The one above was in CAD-JPY and produced 50 pips, I was lucky to capture almost all of this move. Price bounced hard of 100 SMA and kept on climbing for last 2 days, until about now. It even made a new high at 88.70 or so.

Beast moved much more, due to the never ending hammering of the Pound, but here I got in a little later, on the creation of minor low around 135.65. Entry was at 135.61 and this trade brought 89 pips. Just like with CAD-JPY, price promptly turned around and headed up. Not as much or as fast, but nonetheless, it changed direction.

I’m going to see in CHF moves over next few days, SNB action or not. As far as I’m concerned EUR-CHF is still not tradable, but all other pairs are. CAD-CHF, for example, maybe in a process of building a top on 4H chart. It is not a done deal yet. Latest low has not been broken, but the up swings are becoming smaller and smaller. If we see 1.0390 touched, above scenario becomes valid. EUR-CAD and GBP-CAD are also on the watch list, for buys, of course.

Back to Yen pairs. Intermediate term chart indicate possible overbought levels, with MACD divergences easily visible. I shorted EUR-JPY at 123.55, looking for 100 pips. Not much for ether this pair or time frame, but risks are also small. Think that probabilities for decent trade are good here. Now just have to wait and see what market “thinks”.

Mike K.