Thursday, June 10, 2010

EURCHF—no more interventions?

It looks as though the Swiss National Bank has decided to back off on the interventions, perhaps because they weren't doing any good. However, they're sitting on a great pile of Swiss francs in their central bank with their reserves increasing from 153.6 billion to 232.4 billion CHF in May. So maybe they're planning on doing something with that money. Especially now that it looks as though the Euro might be trying to base and, in any case, should correct upwards for the time being.

EURCHF hit a new low at 1.3734 yesterday with a doji candle. The doji would be more impressive if it was at a prior support level but there's nothing to do about that. However, there is positive divergence on the hourly, three-hour, and daily charts. And of course traders are worried about the possible intervention.

More to come but longs right now can have a tight stop and I am willing to try a small long position. However this is not a trade that I can highly recommend as the downward pressure is intense. Selling into rallies is a way one can go but the stop must be very tight because of the pesky intervention risk. Inexperienced traders should stay away from this pair. Take a look at the monthly chart and you'll see what I mean. It's not going straight down but it's pretty gruesome.

© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

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