The Weekly Update: Fed Powell Monetary Policy

Weekly Summary

Most of the action took place towards the end of last week. The market reaction to BOC Poloz (which was exaggerated) along with weak manufacturing sales shoved the Canadian Dollar (CAD) lower against a basket of currencies.

The US industrial production (released on Friday) exceeded the market’s expectations, which triggered some volatility across USD pairs and crosses. The main event this week that is likely to affect numerous currencies is the Fed monetary policy, due Wednesday.

Since the beginning of March we have been extremely cautious as many currency pairs and crosses were held in a range. We reused to widen the protective stops or attempt initiating trades via short time frames. In an event the range continues beyond the Fed monetary policy (which is unlikely at the time of this writing) we will re-evaluate our position.

We have noted that several currency pairs/crosses broke outside their range, however, the majority are still being held in a tight price range at the time of this writing.

CADJPY Signal Strategy

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The Weekly Update: Fed Powell Monetary Policy

CADJPY Daily Chart 18/03/18

We have already highlighted 82.90 as one of CADJPY support levels. The positive divergence is locked-in in the daily chart as well as in the weekly chart. Based on other CAD pairs and crosses the corrective gains may be temporary. As this is a daily entry we are not expecting it to take long for the corrective gains to materialize, Canada’s CPI is one of the most relevant figures to CAD.

AUDCHF Signal Strategy

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The Weekly Update: Fed Powell Monetary Policy

AUDCHF Daily Chart 18/03/18

We have been monitoring CHF pairs and crosses as we updated last week. AUDCHF daily close suggests there may be another (minor) leg lower before correcting higher. As the expected drawdown is minimal we have the ability to absorb it.

The main impact is expected to be triggered by Australia’s employment data but the Fed monetary policy may be sufficient to trigger some volatility across CHF pairs and crosses.

At the time of this writing we are tempted to capitalize on both entries simultaneously. We will decide how we wish to proceed after the opening of the markets.

CADJPY Trade Alert

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The Weekly Update: Fed Powell Monetary Policy

CADJPY Daily Chart II 18/03/18

CADJPY long at market price (ask 80.99)
Take profit: 83.30
Protective stop: 80.00
Risk Ratio (RR): 1 : 2.4 (approx.)
Estimated duration: 10 days (approx.)

Relevant as long as CADJPY is below 81.35

Note: The potential drawdown is a re-test of 80.20

AUDCHF Trade Alert

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The Weekly Update: Fed Powell Monetary Policy

AUDCHF Daily Chart II 18/03/18

AUDCHF long at market price (ask 0.7351)
Take profit: 0.7530
Protective stop: 0.7270
Risk Ratio (RR): 1 : 2.3 (approx.)
Estimated duration: 10 days (approx.)

Relevant as long as AUDCHF is below 0.7370

Note: The potential drawdown is a re-test of 0.7310. There is a fair chance there may be some drawdown in AUDCHF. We are nevertheless opting for the trade as it can be absorbed.

20/03/18 UPDATE: We are shifting CADJPY protective stop to 80.75.

21/03/18 UPDATE: ADJPY is trading at 81.95 at the time of this writing, we are closing 20% of the long trade at market price and shift the protective stop to 81.25 prior to the Fed monetary policy.

21/03/18 UPDATE II:  This was a fairly tough decision. We are shifting CADJPY protective stop to 82.00. We are intentionally close to the market. There is a fair possibility the protective stop may be triggered, however, should CADJPY succeed in breaking above today’s high it may pave the way for stronger gains.

The protective stop was triggered during the Asian session, we ended the trade with a decent profit.

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The Weekly Update: Fed Powell Monetary Policy

CADJPY Daily Chart 22/04/18

The prior screenshot of CADJPY was deleted by error, above the is the current chart of the cross (22 April, 2018) where the progress of the uptrend may be viewed.

25/03/18 UPDATE: AUDCHF is struggling to correct higher. The entry is still valid, however, it is on the brink of being invalidated by the market. We are not keen on widening stops but we are shifting the protective stop to 0.7258.

27/03/18 UPDATE: We are shifting AUDCHF protective stop to 0.7250. We we will not continuously widen the protective stop in an effort to remain in the trade.

30/03/18 UPDATE: We are closing 50% of AUDCHF long position at market price (0.7322) and shift the protective stop to 0.7220 prior to the weekly close as the spread may widen on Sunday (the stop was shifted to 0.7258 on Sunday after the opening of the markets).

03/04/18 UPDATE: AUDCHF is trading at 0.7366 at the time of this writing, we are closing the long trade at market price.

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The Weekly Update: Fed Powell Monetary Policy

AUDCHF Daily Chart 03/04/18

Although the entry is finally kicking into play, it has been over-stretched.


AS THE OBJECTIVE OF THE STRATEGIES HAS BEEN MET THE ANALYSIS IS NOW ACCESSIBLE TO ALL TRADERS


The Weekly Update: Fed Powell Monetary Policy

The Weekly Update: Fed Powell Monetary Policy