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EURCHF Technical Analysis
So far a decent profit was seen in our USDCAD long trade, IBEX35, Bitcoin and even long EURUSD. We are receiving a mixed picture for this week but key focus is on EURCHF.
Read the previous Weekly Update.
This week is extremely challenging. Our technical models provide a mixed outlook for the major currencies aside one, the Swiss Franc (CHF). We are fully aware of the strong correlation between USDCHF and EURUSD but we are unable to invalidate our bullish outlook for the pair. We are therefore lead to believe the Swiss Franc may be heavily sold across the board due to ‘unexpected’ market events. We have seen this in the past when Swiss banks began imposing negative rates on CHF holdings. It is highly unlikely to reoccur but we are willing to take this trade due to its impressive Risk-Ratio (RR).
EURCHF Daily Chart
Please click on the chart to enlarge:
From a technical angle, fair risk for a positive divergence in the Stochastic Slow accompanied by a double-bottom reversal pattern EURCHF daily chart is all we need to concrete our bearish projection for CHF. Euro-Swiss bullish outlook is likely to occur in spikes so we would not expect to hold onto the trade for an extensive period of time.
The bullish target for Euro-Swiss likes at 1.2415, protective stop loss order layered below 1.2108.
AUD Monetary Policy Minutes
Although we do not have a entry at the time of this writing, we are issuing a warning to net long AUD positions. The upcoming monetary policy minutes is likely to be dovish, posing a decent threat to long holdings. We repeat that we do not have an entry but suggest cautionary steps should be taken to lower the market exposure to the Australian Dollar.
Key Economic Figure
This week is enriched with economic data for a basket of currencies. Nevertheless, Yellen testimony on Tuesday is seen as the key event for this week that is more than likely have a great impact on all USD pairs and crosses.
We are maintaining our bullish outlook for EURUSD and suggest further liquidation in USDCAD and Bitcoin. We must highlight that a retracement towards 1.3560 is possible before further gains. We expect EURUSD to reach 1.3900 in the long-term.
16/07/14 UPDATE: The Swiss Franc (CHF) was heavily sold across the FX board as we expected. Our EURCHF long trade is in a fair profit, trading at 1.2154 at the time of this writing. Solid gains were noted in other CHF pairs and crosses, particularly GBPCHF.
23/07/14 UPDATE: We are closing 40% of our long trade in EURCHF at market price, 1.2147. We are uncomfortable with the tight range of the pair and we have to take action in order to minimize our market exposure to CHF.
29/07/14 UPADTE: EURCHF is trading at 1.2158 at the time of this writing. We are shifting the protective stop to the entry as we have acquired a sufficient distance from the market and close 15% of the long trade.
12/08/14 UPDATE: Protective stop loss order was triggered at the entry. We have ended the trade with a profit as we have already liquidated 55% of the trade.
Trade alerts are also issued in the weekly update.