EURCHF Trading Strategy
Since the Swiss National Bank (SNB) lifted the 1.2000 floor in EURCHF the currency pair was able to retrace some of the losses it has incurred. Not many are aware that despite the floor removal the SNB is speculated to have a virtual floor in Euro-Swiss. Based on market speculations that were not denied by the SNB the central bank is allowing EURCHF to float between 1.0450 – 1.0750 in the Forex market. Euro-Swiss reached the lower end of the speculated band of the SNB, which we believe is likely to be heavily defended.
We must assume the central bank layered multiple orders in the market to prevent the price from falling beneath 1.0450. We are certain the bank monitors any developments on Greece as an exit from the euro zone will lead to moderate losses in EURCHF. As we updated all our traders via email, fresh speculations suggest Europe may impose capital control measures over the weekend or on 10 April, 2015. Such capital measures, which were speculated in the past is aimed to restrict capital flow ahead of a potential crisis. That means bank transfers will be limited as well as ATM’s withdrawals and boarder checks will be introduced.
If a crisis does erupt from Greece, moderate losses will be seen across the global markets. We believe however the capital control measures speculations should fuel a rally in EUR pairs and crosses until the odds for a financial crisis increase.
EURCHF Daily Chart
Please click on the chart to enlarge:
Rather than 1.0450, we draw the key support level at 1.0430. This is a strong support level which we are counting the SNB to defend. Fitch credit rating agency is speculated to publish its rating on Portugal tonight where an upgrade is expected. The key risk to the trade is if Moody’s downgrade Greece at the end of today’s session, which is likely to cause EURCHF to gap lower at the opening of the markets on Sunday night. We are however counting on the SNB orders to soak the market bears.
EURCHF Trade Details
EURCHF long @ market price
Take profit: 1.0750
Protective stop: 1.0370
Risk-Ratio (RR): 1 : 3 (approx.)
Estimated duration: 14 days
06/04/15 UPDATE: It took some time but EURCHF is trading at 1.0886 at the time of this writing. Despite the minimal profit, 10% of the trade is closed at market price.
12/04/15 UPDATE: Moderate selling in EUR pairs affected our long trade in EURCHF. Despite the fact we have realized a minor profit the price has triggered our protective stop loss order.
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