QuantumLogicTrading
Long

LONG EURCHF - SNB BID INTERVENTION @ THE 1.08 HANDLE

FX:EURCHF   Euro Fx/Swiss Franc
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
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
BTW, This is where I am in this process...
This pair has been flying under the radar...
Reply
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
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.
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last time it dipped to 1.081 you drew an arrow on it and we ended back up 100pips+?
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streetgainer QuantumLogicTrading
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".
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ive got v good info about 1.08.. if you wanna sell here GL. Lets see what happens is all i can say
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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
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streetgainer QuantumLogicTrading
Lol
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streetgainer QuantumLogicTrading
"ive got v good info about 1.08"....I may take you're advice on this and go long.
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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
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