Same chart as my last post, EUR/CHF 4h zoom out to get a clear view of the channel.
July 20- Right after the market cut-off time (5pm EST), I predict that EUR/CHF is already at its tipping point. And yes indeed, after 3 attemps of crossing the upside, price exhausted and made a sharp drop exactly to the lower channel. And bounce up and down from there 'til the market close of the week (5pm EST).
On 4h chart. The lower channel is also where in confluence with the middle BB (bollinger band), the middle bb which most of the traders ignore is where price usually make a bounce. It is also a few pips near 38.2 fib of a previous major swing.
On 1h chart. It touch the 72EMA and lower ATR, supported by Stoch and CCI indicators curved up from oversold zone.
On monday, I don't know yet where it will go. Probably will make a small retrace up before heading down. If the lower channel or 38.2 fib is breached, the first target is 1.6550 and follow by the round number 1.6500. On the other hand, if it make a full reverse pass the middle channel again, the upper channel will be the TP. Let the indicators guide you.
Another great week for PMTFC and TN account. Happy weekend everyone.
5 to 5
Sell Oppotunity Arise
The EUR/CHF rally stopped out after hitting the previous middle channel, just right after the market cut-off time. Probably liquidation of profits...
Price is way above the Bollinger Band (BB). 3 indicators are on overbought (OB) zone, 1h chart indicators already crossed. And it is at 74.6 fib of a previous major swing (1.6670 HI to 1.6462 LO).
Might be a good time to place a short hedge. I might be wrong. All care taken but take no liabilities. Trade it at your own risk.
Closed after 63 pips...
July 20 (1pm EST) I just closed the GU UC hedge after GBP/CHF rallied 63 pips to the upside. A two and a half hours trade.
Another good week for PMTFC and TN account. No trades on PMTFC at this moment, while TN has 1 set on a drawdown.
Hedge Cable against Swissy
July 19 (10:20am EST) GBP/CHF 1h chart
- Price hit a major trendline and bounce.
- Also hit 72EMA.
- 38.2 fib of previous swing; 76.4 fib of previous bigger swing.
- Stoch and CCI crossed above their significant lines.
- ADX shows losing bear volume and momentum slowing down.
should we place hedge long GBP/USD against USD/CHF? I'll give it a shot.
EUR/CHF- As I have said yesterday. There might still room for the upside, and indeed it went up today. I already closed my long hedge and wait for a dip to enter again.
Carry Trade Restrain from Bear Stearns Woes
Source: Bloomberg
By: Agnes Lovasz and David McIntyre
July 18 (Bloomberg) -- The yen rose as losses on Bear Stearns Cos. hedge funds prompted investors to reduce purchases of financial assets funded by borrowing in Japan.
The Japanese yen advanced against 15 of the 16 most-actively traded currencies as investors scaled back so-called carry trades. The dollar touched a record low against the euro earlier after Bear Stearns told investors in two of its hedge funds they will get little if any money back after losses related to U.S. subprime mortgages.
``Risk appetite is starting to pull back and the potential is that it starts to hurt the carry trade,'' said Ian Stannard, a currency strategist at BNP Paribas SA in London. ``That's positive for the yen.''
Against the dollar, the yen climbed to 122.13 as of 7:19 a.m. New York, from 122.34 late yesterday. It also gained versus the euro, to 168.35 from 168.59. The dollar declined to an all- time low of $1.3833 per euro from $1.3781 in New York yesterday, and last traded at $1.3785.
The yen recovered from a 21-year low versus the New Zealand dollar to trade at 96.58 from 96.63. It rebounded from a 15-year trough against the pound to 250.28 from 250.40 late yesterday.
Investors have favored New Zealand and the U.K. for carry trades because the two countries have interest rates as much as 7.5 percentage points higher than Japan's 0.5 percent rate, the lowest among industrialized countries.
Dollar Declines
The dollar fell to a 26-year low of $2.0548 per pound and weakened to 87.85 cents against the Australian dollar, the lowest since February 1989.
Defaults on loans by homeowners with poor credit histories have deepened a housing market slump that threatens to curb U.S. economic growth. Data later today will show U.S. builders broke ground at an annual pace of 1.45 million new homes last month, down from a 1.474 million rate in May, a Bloomberg survey showed.
Financial industry losses caused by subprime mortgage defaults and the housing slowdown may be addressed by Federal Reserve Chairman Ben S. Bernanke at his two-day semi-annual testimony to Congress starting at 10 a.m. in Washington
A Fed trade-weighted index measuring the dollar's foreign- exchange value fell this week to the lowest since its inception in 1971. The U.S. Trade Weighted Major Currency Index, measuring the currency's performance versus seven currencies, fell to a record low of 77.24 on July 16 and was at 77.29 yesterday.
``Breaking through those levels marks a new stage of the weak dollar trend,'' said Koji Fukaya, senior currency strategist in Tokyo at Deutsche Securities. ``The dollar's depreciation may accelerate.''
Euro May Stall
The euro's gains against the dollar may stall, according to charts traders use to predict future price movements.
The 14-day relative strength index against the dollar was 75.19 today. The index has been above 70, a level which signals the currency is overbought and may be due for a reversal, for a seventh session.
The common European currency faces resistance at $1.3816 and $1.3886, where sell orders are clustered, said Sundararajan Srinivasa, a technical analyst at Lehman Brothers Holdings Inc. in London, in a note to clients.
Any yen gains may be limited by speculation the Bank of Japan will delay raising interest rates while it gauges the impact of subprime loan defaults. The U.S. is Japan's largest export market.
Some BOJ board members said it's necessary to watch the U.S. housing market, according to minutes of the June meeting released today. While some officials said consumer prices excluding fresh food will rise in the long term, others said lower oil prices will exercise ``stronger downward pressure'' on core prices, the minutes showed.
The central bank's board voted unanimously to keep rates unchanged at that meeting. The BOJ decided 8-1 to keep policy on hold on July 12.
``The market has priced in a rate increase in August, but the BOJ may not move until September,'' said Kengo Suzuki, a currency strategist at Shinko Securities Co. in Tokyo.
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I'm still waiting on the sideline. Only 1 set of buy hedge opened that is near breakeven. EUR/CHF is at overbought zone on 1h chart, back to the previous lower channel support turned resistance. 4h chart indicators pointing up, might still have some room for the upside before making a correction down. Long term or the daily chart is still bear bias.
If you look closer to EUR/CHF 4h chart, you might see a semi-declining channel forming, and price is at the top channel.
7.16 Monday
July 16 2:45pm EST- Daily and 4hr chart.
Clear channel (orange) and a smaller TF (4hr, red) channel. I'll wait for the price to touch the lower orange channel. If indicators start to curve up from the oversold zone, I'll open EUR/USD and USD/CHF long positions. Target Profit (TP) is the orange upper channel. This will be a long term trade, might take days or a week.
Note: the channel on the daily chart is not the same channel I drawn on the 4h chart.
But on the other hand, if it makes a clear bounce from the 4hr lower channel (which is the red one on the daily chart above), I'll go for a long from there. Target Profit (TP) is the upper channel of the Daily chart. Bollinger band now is squeezing, a breakout is about to happen, whether up or down... is not confirmed yet.
I'm not gonna open sell hedge for now, even if price penetrate the 4h lower channel. The range from current price to the daily lower channel is too tight. Not worth to risk the margin.... unless drop below 1.6500 or the "daily" low channel.
A recap of today's trade:
Last friday (2 post below), I said I opened both sell hedge (1%) and buy hedge (5%) when price is at the middle channel of the 4h chart. Today, price went down and reached the lower channel which is my TP. I closed the sell positions with a few profits, leaving the buy positions in a drawdown. Then price bounce off from the lower channel, back near where we started 'til it loses steam. Since EUR/CHF is a carry trade pair.... there's no reason to panic leaving buy positions opened.
The logic of my friday's trade is,... it is a hedge within a hedge trick. If for instance the price didn't went down today and shoot up. The buy hedge gains will offset the sell hedge loses. But luckly, it went down first and we had the oppotunity to close those sell positions in profit.
The report I'm giving here is only half of whats really going on on my trade portfolio. What I'm actually doing is much more complicated. It is a hedge within a hedge and within a bigger hedge, A triple hedge. I'm not encouraging newbies to trade this way. This kind of methodology needs lots of computation and some basic trading knowledge.
Friday the 13th
Today is Friday the 13th and also the last day of the trading week. For those directional traders who has paraskavedekatriaphobia, their heightened state of anxiety or fear could have save them from the whipsaw that happened to the majors earlier. It has some advatages being superstitious sometimes, it makes you more caution of things that happening around you.
We had 2 economic news announcement earlier. The Retail Sales (8:30am) and the Consumer Sentiment (10:00am). The 8:30 numbers came out way lower than expected and the 10:00 numbers which is the more important one (for inflation gauge) came out far better than expected. This 2 contradict announcement causes the whipsaw. I bet a lot of small players trading the directional ways with tight stoploss got stopped out on that.
This is the reason why I don't trade the news and hedge the market instead. To know more about the tools I'm using. You may contact/email me at harwin21@yahoo.com. I can set you up with my friend (MikeQC) who is an active sales rep for FreedomRocks. He'll walk you through the process and give you a free trial for the FR software.
For the other tool that I'm using. Which is the True North Hedge Calc., You may just click the yellow banner on the sidetab of this page.
EUR/CHF ended the week with only 7pips below the opening price of this week (1.6594). There were lots of buy & sell hedge opportunities on the small range bounce. I had a great trading week, hope you guys aswhile. Happy weekends everyone!
