Media was buzzing on Monday with news of Philipp Hildebrand quitting as the chairman of the Swiss National Bank over his wife’s currency trades. In response, market participants started to buy the Franc, as if Mr. Hildebrand’s departure somehow would change bank’s view on Swiss currency. The EUR-CHF, original target of earlier interventions, fell to the 1.21 handle, suggesting that markets are ready to test the 1.20 floor set by the SNB. We are still about 100 pips away and talk about a test could be premature, but that is what charts indicate. However, those who expect major changes will probably be disappointed.
The interim central bank chief Thomas Jordan is unlikely to implement important changes in present policy. If anything, he will be under even greater pressure to raise the floor. Many in Switzerland are demanding the EUR-CHF to be at 1.30 even 1.40. This probably will not happen either, at least not immediately. For now, we should expect the SNB to stick with 1.20 floor, although it does not mean an intervention at precisely that level. The price could easily drop perhaps 1.18 before any action is taken. On the other hand, the SNB might start a “soft” intervention now and keep purchasing the Euro in small dozes around the clock without major spikes. Whatever happens, “buying the Euro in unlimited quantities” is still its official policy, which unlikely to change in the short term.
The EUR-CHF is flirting with 1.21 level, possibly on its way to 1.20. I do not plan to buy it at 1.20 solely based on what the SNB is saying, but IF the price dips to 1.20-1.19 and IF there are technical reasons on the 4H/Daily chart to go long, it might not be a bad idea. After all being on the side of the central bank might be positive. Plenty of “ifs” here, so no real plan yet, but a consideration should the price drop lower.
Trade from last post involved the USD-CAD. Plan was to see initial upward continuation, followed by a bearish reversal candlestick on the hourly chart, serving as the entry signal. There was a shooting star, closing at 1.0304, which became my entry. Probably should have waited four more hours for the bearish engulfing line, but that would have produced almost identical entry. It took a while for the USD-CAD reach the 40 pips objective; however, the trade was relatively easy and worked out as planned.
Mike K.
Mike,
Happy new year and all the best for the year 2012. You mentioned in the past that might devote a post on how you trade with the Ichimoku, looking forward to receiving and learning from you this year. I have learnt a lot from your blog. I have read every single post since 2008.
Thank you for sharing without expecting any return and may the heavens bless you.
Alto
Thank you for nice comments! Unfortunately, these articles have to wait until I scramble more time to give them proper attention. Do not want to post some half-baked articles. Right now I don’t even have time to update the blog daily – too many projects going on at once. Things will change later in the year and I will devote more time here. Have a fantastic 2012!
[...] test Swiss National Bank pledge of keeping the floor under the EUR-CHF at 1.20 level. In spite of recent change at the helm, the central has not indicated major policy change concerning domestic currency, suggesting that its [...]
[...] test Swiss National Bank pledge of keeping the floor under the EUR-CHF at 1.20 level. In spite of recent change at the helm, the central has not indicated major policy change concerning domestic currency, suggesting that its [...]
[...] test Swiss National Bank pledge of keeping the floor under the EUR-CHF at 1.20 level. In spite of recent change at the helm, the central has not indicated major policy change concerning domestic currency, suggesting that its [...]