LOOKING TO BUY AUSSIE/SWISS
Fundamental Catalyst – As we head into the final session, the strongest performer on the day has been the Swissy (+1.25%) while the weakest has been Aussie (-0.16%). Price action has been quite choppy overnight and considering the moves have really been driven off of no significant fundamental developments, we feel we could be at risk for some position adjusting back into the US. There is some significant event risk ahead in the form of the monthly US unemployment numbers, and considering the recent moves, we like the idea of fading the strongest currency and buying the weakest purely as a short-term relative value play.
Techs – The cross is in the process of testing key rising trend-line support off of the late December 0.7195 lows, and with the market continuing to chop around while also showing signs of longer-term basing, we like the idea of attempting to establish a long position into the current dip. The daily “Average True Range” projects a potential low just under the trend-line at 0.7340, while the lower Bollinger band comes in by 0.7325. As such, we will look to buy on a dip today to the lower Bollinger in anticipation of a significant rebound. Strategy: BUY @0.7325 FOR A 1.2420 OBJECTIVE, STOP @1.2910. Stops to be trailed to cost on a break back above 0.7400. If trade triggers and 0.7400 not broken, position to be closed out at NY close (5pm EST) on Friday. Recommendation to be removed if not triggered by NY close on Friday.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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