Things started to move yesterday after the FED interest rate decision. While there was nothing particularly new in the announcement,it was the first that time the the central bank put a time frame on how long the current depressed rates might last. As of right now, but subject to change, we can be expect to be exposed to a rate of 0.00%-0.25% until mid-2013. However, markets wanted to know about a possible QE3, of which there was no mention. In response, things got choppy for a while, followed by directional trends for the rest of the day.
Of particular interest to me was the Swiss Franc, which got even stronger after the FED. The USD-CHF dropped to 0.7070, making it about 500 pips range day. I thing the last time that happened was in late 2008. The difference is that the pip value on a standard lot was about $9 then, while at 0.7100 the same pip is worth almost $14. Such fast sell off so late in a trend typically is followed by a sharp correction, even if not a temporary one, so I bought the USD-CHF at 0.7117.
The 4H chart supports the possibility of a good size bounce, with the large hammer at deeply oversold level. Logical objective for this trade is the past support/current resistance at around 0.7500. Next one would be the 100 SMA. Unfortunately, this rebound is not as fast as it could be, given preceding volatility, so I will close half of this position before the end of the day, hopefully for about 200 pips. This is not intended as a longer-term trade, because the daily chart is not encouraging yet. Must wait for more price development.
Mike K.
[...] not start until 4 hours AFTER the peg comments. They were certainly but did not cause the rally. I closed half on my USD-CHF trade for 400 pips profit. The next objective is 0.7800 and another one above at 0.8100. Realistically, [...]