Euro's will on CHF ?

[bearprofits]

Someone please answer a question..... Do support/resistance levels of the EURO play a part in price action of the Swiss?

This morning I had Swissy in a long position, I figured once it had passes 1.2730 that it would continue to about 1.2780 area. ( I had picked this as a resistance level from a high candle/bar 1:00Am EST on 12/8 )

2:45AM EST it abruptly reversed!

2:45AM EST Euro hit support @ 1.2150, 11:00PM EST 12/7.... finished retracement, reversed and started long again.

I know that Euro/Swiss seem to move closely together, was this coincidence or do I need to start taking Euro R/S levels into consideration when planning trades with Swiss?

Hope this is not too much of an obvious question, just looking for some FOREX enlightenment.

Thanks!!!

[Wallace]

Hello Bearprofits, no.

What has to be watched is the JPY. The recent reverse surge of all the currencies followed the large Buy intervention of the Yen by the Bank of Japan. This stopped the fall of the USD against all currencies. The USD/JPY jumped from 106.70 to 108.70, .618 Retracement of the Dec 1, 110.00 High.

While there is much attention on the EUR/USD, and repeated blasts of 'new all-time high', attention must be given to the JPY – USD/JPY because it is the BoJ only that currently intervenes in the forex market.

I realise many people trade Pivot S/Rs levels, I find fibo levels handier and trust the chart also illustrates that channels and channels within channels help anticipate wave direction, turning points and S/R areas and levels.

Agree, disagree ? Wallace.

[Cable]

Bearprofits, interesting post from Wallace - I've never thought of that correlation. In my opinion the Swiss generally moves in the opposite manner to Euro. Todays "reversal" was at a fib extension line. A while ago James (of Teamforex) started a thread about volatility and aayat1 posted some numbers with regard to avearge daily ranges for various pairs. These were

USDCHF 162pips
EURUSD 115
GBPUSD 129
USDJPY 106
USDCAD 125
AUDUSD 78

The swiss had already made about 140 pips so the danger of a reversal was increased. On the daily chart the price had hit the 10 day EMA - a value that is watched by the bigger players.

I have found in the past that watching the Swiss chart does help in trading Euro (and vice versa) sometimes one is cleaner than the other.

As far as Fibs vs. Pivots, Sup & Res levels - everything helps !

Good Luck

[bearprofits]

Wallace, Cable thanks for the help!!

It makes sense that when the BOJ intervenes, all currencies would be affected. I am familiar with Fibo levels but am not currently using them in my TA. Volatility and the average daily range of the different currencies, this is a new one for me. I believe it's time to hit the books!!

Again Thanks!!

[Cable]

Bearprofits, your idea to buy USD/CHF was OK but the timing wasn't. If you put up the 10, 20 & 50 period EMAs on your charts you'll see that the price today retraced to the 20 period EMA, made a nice hammer and at that point a buy would have been better (i.e it's not near the top of the day's likely range). The retrace was also just shy of the .618 Fib level. Interestingly the price made it to a tad above the daily R2 level of 1.2813 giving days range of 160 pips.

Don't hit too many books !

Regards

[Wallace]

Hi Bearprofits, Cable, needed to correct my previous "... Buy intervention of the Yen by the Bank of Japan", tho I'm sure you understand that the BoJ is either buying US$ or selling Yen.

"Japan was thought to have thrown almost ¥18 trillion, or $168 billion, at the foreign-exchange markets this year in a bid to prevent a strengthening yen from choking off the country's export-led recovery." same same other currencies/exporters.

Point: that BoJ seems to be the only intervener, tho knowing when they are about to intervene is another matter. Wallace.