This week is heavily influenced by the central banks. The relevant FOMC session remains in the focus of market participants. The question will be: What will Jennet Yellen announce regarding the rate hike? Many speculate that the Fed will remove the expression "patient" from the statement, which would indicate that a rate hike could follow in the middle of the year. Some believe that while discarding the expression, at the same time, they will weaken expectations for a premature rise through other statements, such as adjusted inflation forecasts.
This is less relevant for a market technician. This mostly focuses on the snapshot and past courses. However, from the perspective of the event trader, it makes little sense to make a forecast in this case. Nevertheless, the analysis of the possibilities is essential for him, since he can only react in time if he can assess the consequences of the decisions.
The following trading ideas do not take events into account, but concentrate exclusively on the market technology, Every trader should therefore be aware that there is a risk that events can undermine the reliability of the market technology.
Trading idea # 1: AUD / USD short
The Australian dollar is one Currency that is subject to enormous monetary control. The central bank wants to see the price against the US dollar at least $ 0.75 per euro. This also supports the technical direction.
On a daily basis, the currency pair is currently trading at $ 0.76354 per euro. A pull-back took place last week. However, the 20s moving average was not fully triggered and the price dropped early due to the strength of the US dollar. The last low was in a range of $ 0.75600 per euro.
Now you might think that the 0.75 was almost reached, because in practice the prices turn a little earlier due to expectations, which could well be the case here. But what if the course overshoots? In this case, there is a high probability that the rapid increase will be very dynamic. A trading idea would therefore be to either bet on a price drop to 0.75 or below.
If you look at the RSI indicator, you can clearly see two highs that are not being overcome could. On the other hand, higher lows can also be seen. The question remains whether the high can be overcome the third time. Then a downward movement could be endangered. But if the higher low is taken again, there is a good chance that the price will continue to fall.
Trading idea No. 2: USD / CHF long
It is It is not surprising that many traders distance themselves from the Swiss franc after the shock in January. A few weeks ago, however, we proposed in a trading idea to trade the USD / CHF currency pair long with a sustainable breakout above 0.95 Swiss Francs per US dollar. As you can see, this trade would definitely have been closed "in the money", depending on the term chosen.
It was likely that the US dollar would make up for the complete crash against the Swiss franc because it was obviously an exaggeration. It is important to know that this does not apply to the EUR / CHF currency pair, but only to the USD / CHF. Another proof that knowledge beyond pure market technology can offer an advantage.
Before the appreciation shock, however, the currency pair was at a relevant resistance on a weekly basis, i.e. in the long term.
Looking at that The fact that the Swiss National Bank will soon cut interest rates further into the negative range, even if the exact time is still unclear, results in a scenario that not only offers a long chance technically, but can also be supported by monetary policy.
A sustainable break-out from the 1.01-1.025 Swiss Francs per US dollar area could initiate another push upwards, which, with the help of an option, can be traded for several days or even weeks
The problem that arises here is that brokers always offer fewer long-term options. Nevertheless, the basic long-term direction can also be beneficial for traders in short-term trading - namely when traders identify corrections at certain levels and then move in that direction.