MARKET CONSUMES MULTI-WEEK RANGE IN MINUTES; EXCELLENT SHORT OPPORTUNITY
Eur/Chf: Another excellent opportunity this morning, very similar to yesterday’s EUR/CAD set-up, with hourly studies trading through the roof and at dangerously overextended levels. We like this trade even better, with the market trading the range of the past several weeks in a matter of minutes, after going parabolic this morning. While the market did manage to exceed some topside resistance by 1.5250, any additional gains are seen limited on Wednesday. Next key topside resistance comes in by 1.5305, which guards against the 2009 highs from mid-March by 1.5450. We will hold the position and see how things play out over the coming hours. Fundamentally, while the SNB has declined to comment on intervention this morning, it is quite clear that the price action is a product of an active central bank who has been committed to the devaluation of their own currency. The SNB has made this quite clear over the past several months and most recently in the latest central bank statement. However, intervention has often proved to be only a temporary and short-term tool, with market forces generally winning out over time. While this principle is not one which can be applied directly to our short-term strategy, we like the idea of being on this side of the trade in favor of the free markets. Position: SHORT @1.5225 FOR AN OPEN OBJECTIVE, STOP @1.5325.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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