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Sold 10,000 Shanghai Fudan-Zhangjiang Bio-Pharma Co.Ltd CFDs @ 3.740Medium term
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13 June 2016 at 2:15 GMT
EURCHF reversal now completed
Instrument:
EURCHF
Price target:
Market price:
Background
The Swiss National Bank issues its quarterly monetary policy statement on Thursday, followed by a press conference from Bank President Thomas Jordan. His comments will be closely watched, as the Swiss franc has been appreciating lately. The SNB’s official line for some time has been that the exchange rate is “significantly overvalued”.
Yet more intervention may be needed to even hold the current level of EURCHF as the German bund curve continues to drift lower, leaving the 10-year maturity sitting just above zero. The SNB has been holding Swiss 3 month Libor close to -0.75%, for some time but its target range is –0.25% to –1.25%, so there is room to lower it further. They may have to do this if the Fed issues a dovish statement of its own on Wednesday, pushing the dollar down and putting more unwanted upward pressure on CHF.
Management and risk description
The dominant chart structure in EURCHF is a completed seven-month Head and Shoulders reversal formation (see daily chart) where whilst neckline resistance (currently situated around the 1.0900 level) now contains. There is downside projection toward 1.0500 over the coming weeks.
Parameters
Entry: Opportunity to Sell around the 1.0860 level today
Stop: 1.0913, initially.
Target: 1.0545.
Time horizon: allow sufficient time for target to be met
EURCHF daily chart (click to expand)
The Swiss National Bank issues its quarterly monetary policy statement on Thursday, followed by a press conference from Bank President Thomas Jordan. His comments will be closely watched, as the Swiss franc has been appreciating lately. The SNB’s official line for some time has been that the exchange rate is “significantly overvalued”.
Yet more intervention may be needed to even hold the current level of EURCHF as the German bund curve continues to drift lower, leaving the 10-year maturity sitting just above zero. The SNB has been holding Swiss 3 month Libor close to -0.75%, for some time but its target range is –0.25% to –1.25%, so there is room to lower it further. They may have to do this if the Fed issues a dovish statement of its own on Wednesday, pushing the dollar down and putting more unwanted upward pressure on CHF.
Management and risk description
The dominant chart structure in EURCHF is a completed seven-month Head and Shoulders reversal formation (see daily chart) where whilst neckline resistance (currently situated around the 1.0900 level) now contains. There is downside projection toward 1.0500 over the coming weeks.
Parameters
Entry: Opportunity to Sell around the 1.0860 level today
Stop: 1.0913, initially.
Target: 1.0545.
Time horizon: allow sufficient time for target to be met
EURCHF daily chart (click to expand)
Source: ThomsonReuters
EURCHF weekly chart (click to expand)
