QuantumLogicTrading
Long

LONG EURCHF - SNB BID INTERVENTION @ THE 1.08 HANDLE

FX:EURCHF   Euro Fx/Swiss Franc
2 months ago
Long EURCHF             - 9/10 Conviction:

1. Having watched the 1.08 level closely post-brexit it certainly looks as if there is some FX intervention going on at the 1.08 handle - suspicions enforced even more as SNB President Jordan has said in the past that FX intervention is on the cards should CHF move even higher when we were around this level previously.

2. Ive been looking for a way to effectively play long euro             positioning based on the view that the ECB has come to an end of its record easing cycle, EURAUD             bids felt pain in the front end of the week before popping following ECB thus I think EURCHF             is a better suited proxy given the ultra low vol             .

3. Volatility is also v low so risk of downside is limited, plus SNB are clear they will can intervene so the chance of long-term losses with this trade are close to 0, especially when you look at the price action


4. Over in rates the 3m             euroswiss futures differential (dec-march) are implying a 2bps cut with dec -0.76 vs mar -0.78, whilst the 3m             euribor implies 0.5bps of hikes with dec -0.31 vs mar -0.315.. both in recent months have experienced significant selling as rate cut hopes have plunged as inflation begins to show some footing especially in Energy.

Trading Strategy - buy EURCHF             <1.081 dips 1.09/1.096TP:


1. Buy EURCHF             on any dips into the 1.081 level, 100pips TP but it is also advisable to take 50 or by looking at the intra day (1hr) moves even taking 10-20pips is possible several times a day as the market constantly moves higher after ANY dipping below the 1.08 handle.

- i wont be running a stop on this trade given what my opinion of the SNB's commitment is and the very low IV and HV
2 months ago
Comment: FYI - MONETARY POLICY USING NEGATIVE INTEREST RATES: A STATUS REPORT - THOMAS JORDAN, CHAIRMAN OF THE GOVERNING BOARD OF THE SWISS NATIONAL BANK
Monetary policy using negative interest rates: a status report


In the current environment, negative interest is necessary and appropriate for Switzerland
Without negative interest, the Swiss franc would rise sharply, unemployment would have risen, and growth would have collapsed
SNB has intervened in the foreign exchange market as necessary since January 2015
Weak inflation and slow economic recovery reason for low interest rates
Historically, Switzerland has always had lower interest rates than the euro area
SNB's negative interest policy has partially restored the interest rate differential to the euro area
Negative interest policy has made the Swiss franc less attractive as an investment currency
Low interest rate environment also presents several challenges for monetary policy
streetgainer
2 months ago
How is this intervention going hold up as the EU and EUR is deteriorating through the beginnings of a banking and real estate crisis?
The EUR itself is beginning to crack under it's own weight as the ECB will be forced to PRINT more. Can you explain why would you want to be long the EUR, and how the EURCHF pair can be propped for much longer as EURUSD, EURNZD, EURAUD... are all seeking lower lows and quite possibly new lows?
Reply
QuantumLogicTrading streetgainer
2 months ago
calls have been made for EURUSD towards parity for the past 24m in which time bears havne been squeezed out and we have maintained a tight range. Im not sure what banking and real estate crisis youre referring too. "Crisis" is too easily throw around, euro isnt in a banking or real estate crisis. Real estate is acting as a function of the easy borrowing conditions where rates are flat and money is consistently flowing into the economy, its naive to think asset orices wont rise in such circumstances. And with regards to the "banking crisis" some jitters about DB dont imo illustrate a systematic issue especially when all but one bank passed the ebas stress tests a few months ago. back in 2014/15 the greek crisis we saw eur take a massive deval of which the market never recovered, this is one of my key reasons for wanting to buy eur, i think further downside is hard to justify. With regards to ecb easing, the future of their APP is uncertain at best. There has been no mention of extending QE past 2017 March, despite most expecting the ECB to announce such measures back in sept (which they also failed to do last week). Plus rates have been unchanged for the past 8m. I am of the belief that the ECB will start tapering.

This doesnt really have anything to do with the above trade. The above trade is based on a hunch and price action, eurchf hasnt dipped through 1.08 in months and as i said every time it has touched the 1.08 it has mysteriously rallied off - if its wrong its wrong but its paid the last 3 times so if it loses this time thats 3/4.

EURAUD and EURNZD are completely different fish.. kiwi and aussie demand are seeing all crosses get weaker, even the USD isnt fairing well against both/ either despite broad gains. that leaves eurusd - at 1.08+ new lows at 1.04 are a way away.. i dont see it happening. besides im positioned in eurchf betting on the snb picking up any eur slack - look how eurchf has traded this past week barely lost 1% where eur$ lost double.. eurchf offers are slow relatively so like i say i think volatility/ range risk will continue to be soft. At

at these levels i continue my view that eurxxx will remain rangebound and we are currently at the lows of the range (aka buy).
Reply
streetgainer QuantumLogicTrading
2 months ago
I should have more specific about the "real estate crisis", it's actually a bubble which is now at crisis levels. Also, I disagree with the amount of impact DB will have "when" it fails. I think it will have a significant impact on the EUR, the morning of. This bank can fail at any given night. The ECB will forced to PRINT, in my opinion. I think EUR dilution is coming soon.

BTW, thanks for replying. I have leaned a lot from your posts regarding monetary policy, you're pretty damn good!
Reply
QuantumLogicTrading streetgainer
2 months ago
Housing bubbles are infact contractionairy to monetary policy e.g. constricts the ECB from cutting rates further and makes then consider in more epth about adding to qe (as is the case in nzd and aud), a rallying housing market is definitely better than a crashing one (2008).

Yes IF DB do Fail then you are likely to be right but i dont think we're in a situation anywhere near close to that (hence why im happy to bet against), the IF is too big in my mind to warrant shorting eur. what makes you say they can fail at any minute? DB has sufficient liquidity, the solvency scare came when 8-15BN of fines from the US were being talked about.. 8-15BN in fines is enough to shake any bank to its core but DB has over 200bn in liquid assets, perhaps give this a read on why DB is unlikely to pop - http://citywireselector.com/news/eight-reasons-why-deutsche-bank-isn-t-lehman-2-0/a955726


Lets also not forget this trade inparticular doesnt have much to do with eur anyway, im simply betting that the snb buy this euro dip as they have done before. we're gonna have to see a real squeeze lower (as greece caused in 2015) for them to stop defending this level.
Reply
QuantumLogicTrading streetgainer
2 months ago
theres 50pips you could have.. did we break 1.08?
Reply
streetgainer QuantumLogicTrading
2 months ago
I should have known better than to doubt you. Great call!!
Reply
QuantumLogicTrading streetgainer
2 months ago
This is my highest conviction trade.. set your buy limits at 1.080 and collect the cash. be aware eurchf often dips back to 1.080 when it makes the first dip so be sure not to miss it if it does!
Reply
streetgainer QuantumLogicTrading
2 months ago
Thank you. Man what a great Call!
Reply
QuantumLogicTrading streetgainer
2 months ago
here comes the dip i was talking about!
Reply
streetgainer QuantumLogicTrading
a month ago
This thing bounces off a titanium wall at 1.08, LOL!, good stuff man, thanx and I owe you a trade set up.
Reply
streetgainer
2 months ago
BTW, This is where I am in this process...
This pair has been flying under the radar...
Reply
QuantumLogicTrading streetgainer
2 months ago
you indicate its going lower, im not into techs but to me that graph looks bullish. higher highs and apart from brexit (which the lows were quickly brought anyway - likely by SNB imo) the trend lines have continued to hold + buying at the trend has paid better than selling the tops so all in all id rather continue being a buyer here especially from a r:r perspective + historically it hasnt worked well for sellers - we havent been below 1.08 structurally for well over a year
Reply
streetgainer QuantumLogicTrading
2 months ago
You actually have to click the chart for it to become current. You will see the it has already broken trend to the downside, this means it will more than likely follow the blue channel downwards.
Reply
QuantumLogicTrading streetgainer
2 months ago
last time it dipped to 1.081 you drew an arrow on it and we ended back up 100pips+?
Reply
streetgainer QuantumLogicTrading
2 months ago
Yes, but if you zoom in you will see the difference between last time and now. From a purely technical standpoint, last time was a very bullish reversal. This time it's very bearish still in this 1081 area, not a green bar in sight, whereas last time you had a very convincing support bounce. Huge difference in sentiment and bids. This is why I say "broken trend".
Reply
QuantumLogicTrading streetgainer
2 months ago
ive got v good info about 1.08.. if you wanna sell here GL. Lets see what happens is all i can say
Reply
QuantumLogicTrading streetgainer
2 months ago
if you want to contribute to my retirement youre more than welcome afterall i need some offers to soak my bids up :D someones gotta pay my TP ha
Reply
streetgainer QuantumLogicTrading
2 months ago
Lol
Reply
streetgainer QuantumLogicTrading
2 months ago
"ive got v good info about 1.08"....I may take you're advice on this and go long.
Reply
QuantumLogicTrading streetgainer
2 months ago
Im 100% long on this one, its the highest conviction ive ben for a trade in some time.. ive ben waiting for months for another dip into 1.08 given its paid well the last 3 times (we went here a few weeks ago and then rallied off 100pips).

On a serious note though, you do have some valid points.. DB and financial stability are v important but personally i dont think atm it is that bad hence why i am positioned.

Ofc if DB went under id cut the trade in an instant
Reply
QuantumLogicTrading streetgainer
2 months ago
FYI -

MONETARY POLICY USING NEGATIVE INTEREST RATES: A STATUS REPORT - THOMAS JORDAN, CHAIRMAN OF THE GOVERNING BOARD OF THE SWISS NATIONAL BANK
Monetary policy using negative interest rates: a status report


In the current environment, negative interest is necessary and appropriate for Switzerland
Without negative interest, the Swiss franc would rise sharply, unemployment would have risen, and growth would have collapsed
SNB has intervened in the foreign exchange market as necessary since January 2015
Weak inflation and slow economic recovery reason for low interest rates
Historically, Switzerland has always had lower interest rates than the euro area
SNB's negative interest policy has partially restored the interest rate differential to the euro area
Negative interest policy has made the Swiss franc less attractive as an investment currency
Low interest rate environment also presents several challenges for monetary policy
Reply
QuantumLogicTrading streetgainer
2 months ago
plus even on that graph you can see there is some mysterious 1.08 support, looks VERY similar to the 1.20 support line which was previously confirmed as SNB bid intervention..
Reply
Ideas Scripts Chart
United States
United Kingdom
India
España
Italia
Brasil
Россия
Türkiye
日本
한국
Home Stock Screener Economic Calendar How It Works Chart Features House Rules Moderators For the WEB Widgets Stock Charting Library Priority Support Feature Request Blog & News FAQ Help & Wiki Twitter
Private Messages Chat Ideas Published Followers Following Priority Support Public Profile Profile Settings Billing Sign Out