LOOKING TO TAKE ANOTHER SHOT IF THE OPPORTUNITY PRESENTS
Eur/Chf: We have no regrets in attempting to short the cross on Wednesday (after it had already rallied some 250 points); even after getting stopped out of our position in such an aggressive manner, and we will once again look to take advantage of the overdone rally on Thursday. However, we will continue to be conservative with our entry point and not look to chase any trades. Key resistance on the cross now comes in by the 2009 highs by 1.5450 and it is expected that this level will be tested in the very near-term. As such, any rallies towards this level should set up a compelling intraday short trade and potential longer-term reversal. Many traders could be caught short the cross following the extreme moves from Wednesday on the back of the SNB intervention, and we feel that the central bank could be looking to teach a lesson after warning against buying Francs. This is a lesson that will be painfully learned on a retest and break of the yearly highs. But we plan on being there when the bell rings and school lets out. We realize our entry is far off, but If it doesn’t play out, than we will happily stick to the sidelines. Strategy: SELL @1.5445 FOR AN OPEN OBJECTIVE, STOP @1.5545. Recommendation to be removed if not triggered by NY close (5pm ET) on Thursday.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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