USDCZK: Playing Dollar Strength

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Another option to play Dollar Strength. The USDCZK showing strong bullish momentum, hitting 21.8600 resistance level , I expect a pullback within the coming few days from that resistance, however, i would be seriously considering a long position from lower levels, possibly around the shaded area and support level near 21.23-21.000, targeting 23.5500.

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about USDSGD 5

;)

thanks technician

Did you know that CZK Central Bank set a floor rate exchange @ 27 vs EUR "as long as needed"?
Source: http://finance.yahoo.com/news/usd-czk-best-emerging-fx-222000120.html

At the time of writing with EUR @ 1.265 it gives a USD floor @21.4 vs USD.

It looks like price is rising mechanically due to EURUSD drop. What's your take about that?

J.Livermore

As you can see, USDCZK is then highly correlated to EURUSD. 1% Ahead.

J.Livermore

Yep, most euro currencies are pretty correlated with the euro.

"At the time of writing with EUR @ 1.265 it gives a USD floor @21.4 vs USD. " It cant be calculated this way,

Technician

Nice insights. Did my homework on a YTD graph, DKK and CZK are quite similar to EUR. (Especially DKK!)
SEK and NOK were better candidates, respectively the worst and the best.

J.Livermore

Yes, sek has been a fantastic short

J.Livermore

But anyway, longing the USDCZK anywhere might be a good idea :D

Technician

Indeed, technically it's very clean, but I have no idea how CZK economy behave and how the central bank wouldn't screw people when removing the floor rate exchange. Stop loss are absolute necessity.

J.Livermore

Well, i have no idea about the countries fundamentals, but damage from removing such floor depends critically on timing, removing the floor should be when there is no big upward pressure on the currency which also depends on the EUR.

Technician

I am sitting close to these CE3 countries. USDCZK is not a bad game to play if pulls back, but I tell you a better one: USDPLN. In Poland they still have 2,5 % base rate, which they might start to cut to 1-1,5 %, at least CB had some hints on that.
USDHUF was a nice long too this year, but if there is a pull back and some rate cuts come in, PLN will perform better as a short. Technically more or less these three ccys look the same. However in PLNHUF for example it is also visible, that probably HUF startes "outperform" PLN. So my take is to long USDPLN on pull backs.

What is the name of your broker?

broker is robbing me!

Hi Technician, I'm assuming this trade isn't active yet due to the pullback not being deep enough to trigger the long call, if at all.

bickster73

Yes , but in general this is a framework or general guide for a potential trade opportunity, so anyone might choose different levels to enter. Like for example if they saw a double bottom formation based on lower time frame analysis.

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