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October 24th 2014. There are some clues that the dollar correction may have come to an end and we are seeing that in the likes of USDJPY, however let’s not get too far ahead of ourselves. Although EURUSD is close to the lows of the week it is by not mean’s certain that the downtrend has resumed and AUDUSD price action would support that counter view.
EURUSD – As I said, close to the lows of the week. I’ve got a number of long positions in this market with an average price just above 1.27. The difficultly with nailing your colours to the mast here is that the results of the European bank stress tests will be on Sunday and that could provide some volatile trading into the Monday session. Blindly taking out big positions on a Friday is not healthy.
EURCHF –As per the webinar here it feels like the world is watching that 1.2045 level but be careful with this one. As we know the SNB has pegged the Euro to the Swiss Franc at 1.20 and it looks like the first real challenge of that level since 2011 is almost upon us. I know a number of traders with their fingers on the buy trigger in the full knowledge that the SNB will sell unlimited quantities of Francs to support this level and yet it could get more complicated than it seems. If I were the SNB I would let the 1.20 level be breached triggering the stop losses just beneath and sucking in lots of short interest. Then I’d come over the top of them all with an aggressive buying of Euros and selling of Francs……..but that’s just me. My real point is the buying EURCHF at say 1.2020 with the stop at 1.1999 is amateur and will almost certainly be punished. Insurance of some sort on this trade is an absolute pre-requisite such as a hedge or a guaranteed stop.
USDJPY – Yesterday I mentioned to watch for a trading price above the high of last weeks hammer candlestick and 107.58 and we got just that. This market now trades in the 108’s and will undoubtedly move higher in the coming weeks above 110.00
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