Trump is likely to continue providing unusual volatility into the Forex market. His remarks towards China and Japan are likely to trigger further volatility as we enter February. The only central bank that may take action is the Bank of England (BOE) in light of recent economic figures. We do not have an entry to long GBP at the time of this writing but it will be our focus on Wednesday’s close.
EURJPY Weekly Chart
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EURJPY Weekly Chart 31/01/17
It is a similar entry to what we have used in our most recent trade in EURJPY. The monthly close may provide an entry, however, after analyzing other JPY pairs and crosses it appears JPY is positioned to weaken only after the weekly close. The only reason we are not waiting for the weekly close in Euro yen is due to the monthly close. We are monitoring AUDJPY but we stress we will have to wait for the weekly close. The reversed H&S is intact with a potential for a bullish flag upon a successful break above 123.50.
AUDCAD Daily Chart
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AUDCAD Daily Chart 31/01/17
Similar to EURJPY, we have noted the potential for reversed H&S in AUDCAD daily chart. This is inline with our long trade in EURCAD. As we have an entry in both EURCAD and AUDCAD we assume the Canadian Dollar is due to weaken despite the better than expected GDP that was released today.
Swiss Franc
As we noted in our recent updates, speculations suggested the SNB removed the intervention orders in EURCHF, which allowed the pair to trade lower on Monday’s session. The 2 possible scenarios are a rate hike or re-initiating the floor. Our concern is that the recent recovery in Euro Swiss provides us with a short entry, which makes the case for a rate hike stronger. However, we will not long CHF as we are aware the floor may be raised at anytime. In an event of a rate hike we will study the market and begin shorting CHF. To recap, we were short EURCHF prior to the floor removal. The SNB slashed rates a week (approx.) prior to removing the floor, which triggered a spike in EURCHF and reached the stop that was shifted to the entry. It would therefore be more appropriate for SNB to hike rates prior to applying the floor although we are aware both can be done simultaneously.
In regards to USD, we have attempted to long EURUSD but were unsuccessful in obtaining our target for the pair. At the time of this writing the US Dollar is positioned for further weakness. We do not have an entry at the time of this writing. We may attempt an intraday entry later this week, possibly after the Fed monetary policy.
AUDCAD Trade Alert
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AUDCAD Daily Chart II 31/01/17
AUDCAD long at market price (0.9879)
Take profit: 1.0060
Protective stop: 0.9800
Risk Ratio (RR): 1 : 2.2 (approx.)
Estimated duration: 14 days
EURJPY Trade Alert
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EURJPY Weekly Chart II 31/01/17
EURJPY long at market price (121.82)
Take profit: 126.30
Protective stop: 120.05
Risk Ratio (RR): 1 : 2.5 (approx.)
Estimated duration: 24 days
EURCHF Trade Alert
EURCHF 4hr Chart 02/02/17
EURCHF long at market price (1.0688)
Take profit: 1.1600
Protective stop: 1.0640
Risk Ratio (RR): N/A
Estimated duration: N/A
Note: This is a 4hr entry. The technical target is between 70 – 100 pips. We are deliberately setting a higher take profit in a scenario the SNB intervenes. We cannot provide a time frame for the trade but we will downsize the trade based on the technical progress in the 4hr chart. We are aware the Non-Farm Payrolls is due tomorrow. We are setting a slightly larger stop as we noted the spread widened to +14 pips (approx,) in yesterday’s close. The RR greatly depends if the floor is applied but he minimal RR should be at least 1:2.
02/02/17 UPDATE: AUDCAD is trading at 0.9991 at the time of this writing,
Please click on the chart to enlarge:
AUDCAD Daily Chart 02/02/17
We are closing 30% of the long trade at market price and shift the protective stop to the entry.
05/02/17 UPDATE: AUDCAD is trading at 1.0004 at the time of this writing, we are closing 10% of the long trade at market price and shift the protective stop to 0.9940.
05/02/17 UPDATE II: EURCHF is trading at 1.0699 at the time of this writing. We are closing 10% of the long trade at market price and shift the protective stop to the entry despite the minimal distance from the market as this is a 4hr entry.
EURNZD Trade Alert
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EURNZD 4hr Chart 05/02/17
EURNZD long at market price (1.4745)
Take profit: 1.4890
Protective stop: 1.4690
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 5 days
Note: We are taking a minor risk by initiating a long trade at current levels as a lower price would reduce the possibility of re-testing 1.4712. We will not wait 4 hours for the 4hr close to re-assess EURNZD. As this is a 4hr entry the gains must materialize within the next 24 hours.
06/02/17 UPDATE: EURCHF and EURNZD triggered the stops following EUR weakness. We are not re-entering either pair.
06/02/17 UPDATE II: As AUDCAD is less than 50 pips from its take profit we are closing the long trade at market price (1.0022).
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Last Updated on March 26, 2017