EUR CHF & GBP CHF Swing Trade Analysis for W/C 26th Sept 2011

EUR CHF & GBP CHF Swing Trade Analysis for W/C 26th Sept 2011

Since the SNB Euro Peg we’ve seen both EUR:CHF and GBP:CHF rally exceptionally hard to overbought levels. As I was fortunate enough to have participated in the long side of the GBP:CHF move, I’m now looking for signs to enter short ahead of a pull back.

So, we are in a situation where medium or even long term trends have likely changed from down, to up. But, looking at the bigger picture and it’s clear that the multi-year down trends are still intact, and this combined with multiple resistance levels overhead, as well as overbought oscillators could foresee a nice pull back worthy of 400 points or more. I’ve every intention of finding these 400 points and banking them! We also have to bear in mind that Euro is already trading 400 points North of the 1.20 peg level.

Why a joint post detailing 2 CHF pairs in one go? Well, the similarities between them are uncanny, so one pair may go on to provide an edge as to the likely trading direction of the other.

First of all, GBP:CHF has found itself in a converging area of Channel Resistance, the 61.8% Fib retrace and a test of it’s Daily 200MA which has historically offered solid resistance. All 3 of these levels are indicative of a situation where profit taking is likely to begin. But, confidence on the bullish side is so high that an overshoot of these levels is quite a possibility and would certainly play into the hands of patient traders waiting for that perfect opportunity to get short for a sharp pull back that will completely wipe out bulls arriving far too late for this party. Therefore, the best opportunities for a safe entry are likely to be found intraday.

GBP:CHF

For GBP:CHF, the targeted area will be in the vicinity of the Weekly 20MA which is yet to be tested from above and currently resides at 1.345 – around 500 points lower than the current print.

Moving on to EUR:CHF and things are a little more interesting. The set up is almost identical to that of GBP:CHF but here we have another area of resistance between 124.00 and 125.00 with 125.00 being the 76.4% Fibonacci retrace level. If you run your Fibonacci tool across a few Euro pairs on the daily time frame you will note that the 76.4% retrace is a favourite for Euro. A move to this level would add weight to the likelihood of an overshoot beyond resistance for the GBP:CHF as discussed above. 125.00 would also place Euro 500 points above the SNB peg. If we saw this level I would not hesitate to enter, it really would be far too extended for a rally that has increased price by 125% in less than 2 Months.

EUR:CHF

In the mean time, both of these pairs are right at the top of my Watch list and I fully expect to take a position on at least 1 of them within the next 10 trading days, maybe much sooner depending on how things pan out. I will of course update the comments section of this post as soon as I’m positioned.

7 Comments
  • bracke
    Posted at 16:48h, 25 September

    RS2000

    I do not trade either of these two but both appear intersting based on their proximity and previous reaction to the 200SMA.

    I note that the Daily MACD on both suggests overbought but the Weekly suggests further to go. So maybe a retrace is due

    I will put them on my watch list and track their movement.

    Thanks for the heads up on them.

  • RS2OOO
    Posted at 23:17h, 26 September

    Entered the EUR:CHF short today. The entry level was not my ideal level as defined in the above chart, but I did get a sell signal intraday on the 5 min chart so I’ll run with it overnight and see how it looks in the morning.

    Would like to get stops to breakeven as soon as possible on this, but if price keeps bouncing around my entry level I’ll probably close until things start moving.

  • bracke
    Posted at 09:56h, 28 September

    RS2000

    No direction on this yet.

  • RS2OOO
    Posted at 18:03h, 28 September

    No, it’s moving a little slowly right now, concerns me that it might start to fall a little, then spike up before dropping hard.

    I’ve been short for a couple of days, but nothing has happened yet, just bouncing around between -30 and +30

    Entered AUD NZD long this morning.

  • RS2OOO
    Posted at 17:10h, 30 September

    Closed the EUR:CHF short today for +61 points.

    This was one of 2 short EUR positions. It’s hardly moved all week and todays visit to the daily 20MA and 4 hourly 100MA where support was found on both time frames was a fair opportunity to both exit the position with a few points and to go into the weekend with slightly less EUR short exposure.

    For now I still hold the EUR:GBP short, undecided whether I’m going to close it tonight or hold through the weekend. I should run it as technically there doesn’t appear to be any strong reasons for it to rally from current levels.

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    Posted at 02:30h, 01 October

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