Johanes
Short

JLS: USDCHF Target Zone, Price Trend & Trend Channel Trading

FX_IDC:USDCHF   U.S. Dollar / Swiss Franc
The original estimated target zone for USDCHF was 0.9700-1.0200-1.0700 of which the 1.0200 was estimated as the central band/central parity of the target zone. However, the CHF carry traders limit their carry trading activity to carry the USDCHF up to the level of 1.0100/1.0150 below the estimated central parity 1.0200 and disposed their trading activity.

The current estimated target zone is 1.0200-0.7900-0.9200. It should be closely monitored if the CHF carry traders will re-carrying the USDCHF at 0.9700 back to 1.0200. Accordingly, the current target to trade limit to 1.0200-0.9700 price trend channel.

Short trade could be executed at "price trend" and or at "upper price trend channel" and/or near the "upper price trend channel" by placing stop loss 50-65 PIPs above the upper price trend channel to target the lower price trend channel and to be repeated as possible (multiple tranches) until the lower band/ceiling 0.9700 to be reached.

The presented price trend drawing also indicate the "S-Curve" of the currency band theory. The "U-Shape Band" however not possible to be indicated and only presentable with "collective interest rate currency band".

CHF carry traders may not be able to carry individually at 0.9700 estimated lower band/ceiling however could be made collectively with JPY carry traders. At such, the lower band/ceiling of the USDJPY to be important to monitor for collective carry trading effort, and should both the USDCHF and the USDJPY to reach their lower bands/ceilings then the carry trading activity could be "initiated". This "initiation" however still at risk. For more information please refer to BIS' survey reports.

Forget not, both CHF and JPY carry traders will still face the risk on carry trading activity if and when NZDUSD , CADUSD , AUDUSD , GBPUSD and EURUSD not to reach their lower bands/ceilings. Therefore, CHF and JPY carry traders become at "risk-free" by carrying the major currencies if and and when both USDCHF and USDJPY to reach their lower bands/ceilings and the major pairs NZDUSD , CADUSD , AUDUSD , GBPUSD and the EURUSD to reach their lower bands/ceilings. This is the "risk-free carry trading modul" of the carry traders.
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